The Council also left the O/N deposit rate at 5.50pc and the O/N collateralised loan rate at 7.50pc. The rates mark the ends of the central bank's symmetric interest rate corridor.

In a statement released after the meeting, the rater-setters said the decision was taken in line with their "stability-oriented" approach, adding that maintaining tight monetary conditions was warranted.

"A careful and patient approach to monetary policy remains necessary due to risks to the inflation environment as well as trade policy and geopolitical tensions," they said.

The Council also announced a decision to reduce the required reserve ratio from 10pc to 8pc, effective August 1, 2025, in line with the gradual decline in the excess liquidity of the banking system during the first half of the year. The non-interest bearing part of required reserves remains at 2.5pc of the reserve base.

"With this technical adjustment, liquidity developments are neutral in terms of their overall impact on monetary transmission and do not imply any change in the continued tight stance of monetary policy," the Council said.

At a press conference following the decision, central bank governor Mihaly Varga said the reduction in the mandatory reserve ratio was of "a technical nature", adding that the stance of monetary policy remained tight. He said the reduction of the ratio offset the impact of expiring central bank programmes on liquidity.

He said that policy makers' forward guidance remained unchanged in July, too.

Addressing macroeconomic and financial market trends, Varga pointed to uncertainty in the global economy because of trade and geopolitical tensions. He acknowledged the "significant impact" price restrictions had on mitigating inflation, but said that there was strong repricing and household inflation expectations remained high, even as corporate price expectations moderated.

High-frequency data indicate restrained economic performance in the second quarter, he said.

Fielding questions, Varga highlighted the importance of meeting the conditions for adopting the euro and said it would be worth deciding on a timetable for eurozone accession when those conditions were "within sight".

He said there had been no developments that would require changes to the forecasts in the central bank's latest quarterly Inflation Report released in June.

Varga said a review of whether it was necessary to increase the central bank's gold reserves was underway.


Source: MTI – Hungary’s national news agency since 1881. While MTI articles are usually factual, some may contain political bias, and readers should be aware that such content does not reflect the position of XpatLoop, which is neutral and independent.

Since the goal of XpatLoop is to keep readers well briefed, right across the spectrum of opinions, MTI items are shared to ensure readers are aware of all narratives within the local media.

XpatLoop believes in empowering readers to form their own views through complete and comprehensive coverage. To facilitate this XpatLoop has a balanced range of news partners, as you can see when you surf around XpatLoop.com

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