The Council also lowered the O/N deposit rate by 25bp to 5.25pc and the O/N collateralised loan rate by 25bp to 7.25pc. The rates mark the ends of the central bank's symmetric interest rate corridor.

The policy makers had not changed the key rate since September 2024.

In a statement released after the meeting, the Council said that "favourable developments in underlying inflation and the stability of financial markets allowed for a cautious reduction in interest rates", pointing to a drop in headline CPI to 2.1pc in January.

The Council noted that the central bank's latest forecast shows CPI under the 3pc target in the coming months, before temporarily rising close to the upper bound of the +/-1pp tolerance band, according to the NBH's latest forecast.

"The central bank will continue to ensure positive real interest rates in order to achieve the inflation target in a sustainable manner," the Council said.

The Council reiterated the need for a "careful and patient" approach to monetary policy due to risks to the inflation outlook, and said price stability can be achieved "through tight monetary conditions".

"The Council is constantly assessing the impact of incoming macroeconomic data and financial market developments on the inflation outlook, based on which it will take decisions on the level of the base rate in a cautious and data-driven manner from meeting to meeting," the statement said.

At a press conference after the meeting, central bank governor Mihaly Varga said the 25bp rate cut was the only option discussed. He added that the decision did not mark the start of a loosening cycle.

Varga said the rate cut was made possible by favourable inflation developments and financial market stability.

The minutes of the meeting will be published at 2:00 in the afternoon on March 11.

Press release on the Monetary Council meeting of 24 February 2026

Budget deficit 'under control' - economy minister

The budget deficit is "under control", National Economy Minister Marton Nagy said at a conference organised by the Ludovika University of Public Service.

Nagy dismissed any suggestion of "fiscal alcoholism" and noted that the general government deficit had fallen to 4.7pc of GDP in 2025, calculated according to European Union accounting rules.

He added that the budget gap was due in large part to the cost of debt maintenance, while the primary balance was stable and Hungary had a current-account surplus.

Nagy acknowledged that the increase of state debt needed to be reversed.

Nagy pointed to the success of government efforts to boost local ownership in strategic sectors, but said foreign owners were still in the majority in the telecommunications, IT and building materials sectors. A decline in the share of domestic ownership in the retail sector from 41pc to 40pc is "distressing", he added.

He highlighted the stable operation of the country's banking sector and said the National Bank of Hungary's international reserves had reached a record EUR 60bn.

Nagy reiterated earlier remarks on reducing the number of big banks in Hungary to five: "OTP, MBH Bank, K+H and UniCredit, with the fifth spot up for grabs".

Nagy said the goverment had rolled out sectoral taxes to spread the public burden more evenly, adding that special taxes on banks, energy comapnies and retailers had raised HUF 17,000bn in budget revenue in 2010-2026. Sectoral and windfall profit taxes are set to bring in around HUF 2,000bn in 2026, he added.

Nagy said government-mandated price restrictions were a "necessary step" to bring down inflation, adding that that those "so-called unorthodox" measures had been applied in other countries in Europe, too.

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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