The National Bank of Hungary reduced its key interest rate by 25 basis points to 5.5% on Tuesday, marking the third consecutive cut as inflation slowed to a decade-low of 1.2% in July.
The decision aligned with expectations from all 20 economists surveyed by Bloomberg. Governor Mihaly Varga noted potential for three additional quarter-point reductions, though future policy adjustments will depend on updated inflation projections.
The central bank previously projected average inflation of 1.8% for 2026 in June, down from a 3.8% forecast in March. The July inflation reading was the lowest since 2016, supported by currency appreciation that reduced import costs.
Varga indicated that the scope for further easing would be reassessed at the September meeting, when quarterly inflation forecasts are scheduled for release. Energy price risks remain elevated amid ongoing geopolitical tensions between the U.S. and Iran, which could influence future policy decisions.
