Analysts expect a base rate cut only in H2 2026

HUNGARY - In Brief 17 Nov 2025 by Istvan Racz

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The Monetary Council is set to hold its regular monthly rate-setting meeting tomorrow. Analysts participating in Portfolio.hu's monthly poll uniformly expect the 6.5% base rate to hold on this occasion. Indeed, it would be just very surprising if the Council decided to go for a rate cut, after its consequently hawkish communication in recent months, a mediocre (more bad than good) set of CPI data for October, the government's recent announcement on further loosening of fiscal policy, and PM Orbán's presentation of an additional fiscal campaign gift, a HUF 80-90 bn tax reduction granted to small entrepreneurs earlier today.But this is not all. Actually, none of the analysts responding to the Portfolio.hu poll expect any base rate cut in December either, and the predominant view is that none will likely take place before mid-2026. This is once again logical, given the extremely loose fiscal policy stance promised for the pre-election period. For end-2026, however, the median expectation for the base rate is just 6%, reflecting the logic that whatever government emerges from the election, its only realistic chance will be a major tightening of fiscal policy in H2 2026. We basically agree with this theory, even though expecting 50 bps in base rate cuts on this basis is currently a bit tentative, as there are a number of genuinely unknown factors, like e.g. the currently unknown prospects for administrative price controls.By the way, the reason why PM Orbán, together with the head of the Hungarian Chamber of Commerce and Industry, announced the new tax reduction measures exactly today is most likely that he wanted to draw public attention away from the activities of opposit...