No base rate change is likely at Tuesday's Monetary Council meeting

HUNGARY - In Brief 22 Jun 2025 by Istvan Racz
The Council is set to hold its regular monthly rate-setting meeting on Tuesday, June 24. So far this year. all decisions, and indeed all votes within the Council, were for holding the base rate at 6.5%. Last time, on May 27, the Council concluded that neither domestic inflation, nor external conditions allow a reduction of the base rate. Since then, the May inflation data, with some increase in the headline rate, came out, and a military conflict erupted in the Middle-East, the latter with a very big risk of a sharp increase in oil and gas prices. Under such conditions, any loosening of central bank policy is pretty much out of the question, and the Council is very likely to keep the base rate unchanged. It will be interesting to see the Bank's new forecast in the Q2 inflation report, which is due to be discussed on this occasion. Even more interesting may be the Council's conclusion on the prospects of interest rate policy. It is quite likely that the Council will not make any positive remark as regards any possible base rate reduction in the rest of 2025.

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