National Bank governor Varga promises “stability-oriented” policies, acknowledged possibility of higher inflation

The National Bank of Hungary (NBH) will continue its “disciplined”, “stability-oriented” monetary policy as economic and financial uncertainty increases amid trade tensions, central bank governor Mihaly Varga said in a statement issued in Warsaw, where he is participating at an ECOFIN meeting, on Friday.

Varga acknowledged the possibility of higher inflation

Varga acknowledged the risk of lower growth and higher inflation in Hungary as a result of the tariff war, but said the country’s economic foundations were stable and growth had restarted, while the capital position of the local banking sector was strong and there was ample liquidity in the system.

New tariff measures and the uncertain global economic environment present downside risks, he said. The fight against inflation has not ended, and patience is indispensable on the central bank’s part, he added. He noted that more than two-thirds of OECD members and 22 of the 27 EU member states had seen higher inflation since September 2024.

New tariff measures

Although it is still too early to gauge precisely the impact of the new tariff measures on inflation, achieving price stability and maintaining financial market stability amid the uncertain environment is only possible with continued disciplined and restrictive monetary policy, he said.

Varga pointed to a number of challenges faced by European capital markets that were holding back the continent’s development and global competitiveness. Harmonising regulations, stepping up transparency and promoting financial culture are necessary to strengthen capital markets, he added.

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