The Hungary interest rate could fall again on Tuesday, 21 July, when the Monetary Council of the Hungarian National Bank (MNB) holds its next policy meeting. Analysts widely expect a 25-basis-point reduction, which would lower the central bank’s base rate from 6% to 5.75%. The decision could gradually ease financing conditions for households and businesses, although investors will also be watching for any pressure on the Hungarian forint.

Tuesday’s meeting is part of the MNB’s previously announced 2026 schedule rather than an extraordinary session. The official decision is due after the Monetary Council’s regular policy meeting.

Hungary interest rate expected to fall to 5.75%

All analysts surveyed by Hungarian economic news site Portfolio expect the MNB to reduce the base rate by 25 basis points. The median forecast puts the rate at 5% by the end of 2026, although individual predictions range from 3.75% to 5.5%.

The expected move would continue the easing cycle launched in June, when the central bank lowered the base rate from 6.25% to 6%. At the time, MNB Governor Mihály Varga indicated that further quarter-point cuts could follow in July and August.

The latest inflation figures support another reduction. Consumer prices in Hungary were 1.7% higher in June than a year earlier, while prices remained unchanged compared with May, according to the Hungarian Central Statistical Office.

As Pénzcentrum noted in its summary of market expectations, the combination of low inflation, a relatively stable forint and an improvement in Hungary’s perceived financial risk gives the central bank room to cut rates. Renewed geopolitical tensions in the Middle East could nevertheless lead the MNB to adopt a more cautious tone when discussing the next stages of monetary easing.

What the decision could mean for Hungary’s economy

A lower Hungary interest rate can gradually reduce financing costs across the economy. Commercial bank lending rates do not necessarily fall immediately or by the same amount, but a sustained reduction in the base rate may eventually make corporate loans, mortgages and other forms of borrowing cheaper.

For companies, lower borrowing costs can support investment, expansion and job creation. Households with variable-rate loans may also benefit over time, while prospective homebuyers could see more favourable financing conditions if banks pass the lower rates on to customers.

The effects will not be entirely positive for everyone. Savers may receive lower returns on deposits and other low-risk, interest-linked investments. The MNB must also ensure that rate cuts do not revive inflation by stimulating demand too rapidly.

The bank’s communication after Tuesday’s decision may therefore matter more than the widely expected 25-basis-point move itself. Investors will be looking for guidance on whether another cut remains likely in August and whether the cycle could continue into the autumn.

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Could the forint weaken?

Interest rate cuts can put downward pressure on a currency because they reduce the return available on assets denominated in that currency. However, analysts quoted by Portfolio and Pénzcentrum do not expect Tuesday’s decision alone to cause a sharp depreciation of the forint.

Even after a reduction to 5.75%, Hungary would retain a strongly positive real interest rate when compared with the latest 1.7% inflation reading. The country’s policy rate would also remain relatively high by regional standards, helping preserve the appeal of forint-denominated investments.

Analysts believe the forint has limited room for significant further appreciation, but they also see a ceiling on potential weakening under current conditions. The exchange rate is likely to be influenced not only by the MNB but also by international energy prices, geopolitical risks, Hungary’s fiscal position and investor confidence.

If you missed it: The Hungarian forint is weakening sharply – what comes next?

Debate over how interest-rate decisions are made

The forthcoming decision coincides with a broader debate over the composition of the Monetary Council. In a Portfolio opinion article, economist László Bokor argued that visible disagreement among external council members had almost disappeared since 2013.

Based on his analysis of voting records, the proportion of external members opposing the central bank governor’s position fell from an average of 31% before March 2013 to 4% afterwards. Bokor proposed selecting external members through an open application process and giving the MNB’s chief economist a seat on the council. These are the author’s reform proposals, not an announced government or central-bank plan.

For markets, however, the immediate question remains the future path of the Hungary interest rate. A cut to 5.75% is largely priced in; the decisive signal will be whether the MNB believes low inflation and financial stability leave room for further easing without placing the forint at risk.

As we wrote earlier, Hungary’s central bank governor Mihály Varga sends a strong message about the country’s financial position

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