Hungary Central Bank Holds Base Rate Steady for Eighth Month Amid Inflation Concerns

Hungary's central bank has maintained its key interest rate at 6.5% for the eighth consecutive month, a move anticipated by economists and reflecting a careful approach amid ongoing inflation risks and economic stagnation. Despite headline inflation declining to 4.2% in April, core inflation remains elevated, and the bank emphasizes the need to anchor inflation expectations, which continue to be high among households and firms. The economy showed stagnation in the first quarter, weighed down by weak industry and construction performance as well as global trade uncertainties, prompting policymakers to keep monetary conditions tight. Analysts suggest a potential for a modest rate cut later in the year, but current market volatility and inflation concerns have so far prevented easing. Hungary shares the highest base interest rate in the European Union with Romania, underscoring the central bank's hawkish stance to ensure long-term price stability. Additionally, credit rating agencies are reviewing Hungary's outlook amid these economic challenges.