Hungarian central bank cuts rates, strengthens forint

The Magyar Nemzeti Bank (MNB) led by Governor Varga Mihály reduced the base interest rate by 25 basis points to 6.00%, marking the latest in a series of cuts aimed at curbing inflation. The central bank now expects annual inflation to fall to about 1.8 % in 2024 and 2.3 % in 2025, comfortably below its tolerance band. The rate cut lifted the euro‑forint exchange rate to around 355 HUF per euro, reinforcing the forint after a brief weakening.

The lower policy rate is expected to lower yields on Hungarian state bonds, prompting a shift toward fixed‑rate instruments as investors adjust to a declining inflation outlook. In parallel, legislation tied to the MNB’s policy has reduced the maximum total cost of credit (THM) for personal loans from 30.50 % to 30.25 % effective July 1, making consumer credit cheaper. The bank also began issuing renewed 1,000‑forint banknotes as part of its currency renewal programme.

Overall, the MNB’s actions are projected to sustain the current strength of the forint, support lower borrowing costs for households, and reinforce confidence in Hungary’s economic outlook.