Hungary Central Banker Signals Potential for Rate Cuts
Deputy Governor Zoltan Kurali says improved risk premia and lower inflation have reduced the interest rate level needed for price stability. While positive real rates remain necessary, the bank is reviewing its medium-term inflation target as the new government eyes future euro adoption.
The National Bank of Hungary may lower interest rates as inflation and risk premia fall below previous projections. Deputy Governor Zoltan Kurali said improving domestic data suggests the required rate for price stability has likely decreased. The shift signals a potential pivot for the European Union's formerly highest interest rate regime.
### Disinflation and Risk Premia Drive Policy Shift Consumer prices in Hungary rose 1.8% in the first four months of 2026, significantly trailing the central bank's 3.8% annual forecast. Kurali told Reuters on Friday that better-than-expected inflation data and a "regime shift" in risk premia are altering the monetary landscape. While one policymaker proposed a cut in May, the bank maintained its base rate at 6.25%.
