Why did the interest rate stay the same?

By: Trademagazin Date: 2025. 08. 26. 10:50

The decision-making body of the Hungarian National Bank did not change the key interest rate at its meeting on Tuesday, so it remains at 6.5 percent. According to Dávid Németh, the chief analyst at K&H, the decision is primarily justified by the inflation environment and fiscal policy. Although inflation and core inflation have both decreased, currently hovering around 4 percent, an acceleration is expected in the short term, which may be further strengthened by steps to loosen the budget.

The analyst highlighted that the forint exchange rate also warns the central bank to be cautious: compared to the euro, the exchange rate has again come close to the 400 level, which also spoke against a possible interest rate cut. In addition, the international environment is also uncertain, for example because we still have to wait for the Fed, which plays the role of the US central bank, to cut interest rates.

He added that in the fall, the decisions of credit rating agencies about Hungary may also play an important role in the development of interest rates. The S&P review in October could be particularly critical for Hungary, as the country is currently in the investment grade category with a negative outlook. If no downgrade is forthcoming, the possibility of an interest rate cut could be on the agenda in November or December. However, this would also require that the risk premium not increase. In the meantime, the Hungarian central bank could remain in data-driven mode, and strict communication is expected.