Hungary Holds Base Rate Steady at 6.5% Amid Inflation Surge

The National Bank of Hungary has unanimously decided to maintain its base interest rate at 6.5%, the highest in the European Union, during Governor Mihaly Varga's first policy meeting. This marks the sixth consecutive month the rate has been held steady, following previous cuts totaling 11.5 percentage points. The decision comes amid rising inflation pressures, particularly from food and services, with annual inflation reported at 5.7% in February. Economists predict that inflation could average 5.15% this year, exceeding earlier projections, and have adjusted their expectations for rate cuts to only 25 basis points by the end of 2025. The central bank's guidance will be closely monitored as Varga outlines future economic forecasts. Prime Minister Viktor Orban has also implemented measures to cap food prices to combat the inflation surge.