The forward guidance has been changed at today's Monetary Council

HUNGARY - In Brief 16 Dec 2025 by Istvan Racz

---

The Council's last regular monthly rate-setting meeting in 2025 was held today. On this occasion, the Q4 inflation report was also discussed, the details of which will be presented by the MNB staff the day after tomorrow.On this occasion, the base rate and the corridor were left unchanged at 6.5% and 5.5-7.5%, respectively, as expected. However, the forward guidance has been changed. So far, the Council kept saying in essence that any base rate cuts are necessarily so far away that it is just too early to speak of any possible occurrence and the timing of those. However, this time they are saying:'The Council continuously assesses incoming macroeconomic data and factors influencing the inflation outlook, in particular the repricing actions at the beginning of the year and the stability of financial markets, on the basis of which it makes prudent and data-driven decisions on the base rate from meeting to meeting.' This brings the first base rate cut potentially closer or significantly closer than thought by analysts so far, as the latter essentially have not been expecting any base rate cut between now and the election in early-April.The background for this change appears to be that according to the MNB, the global investment environment has improved since the last rate decision. Energy import prices have decreased very substantially, and the beneficial impact of the strong forint can be seen in the domestic inflation picture. Regarding the latter, the MNB have become more optimistic than in September, even though they are still saying that the 3% target level can be reached on a sustainable basis only by H2 2027. Predicting average headline inflation rates as usual, th...