Hungary maintains highest EU interest rate as inflation concerns rise.

From Yahoo Finance: 2025-03-25 12:05:00

Hungary is unlikely to cut interest rates soon, as Governor Mihaly Varga cited a worsening inflation outlook. The National Bank of Hungary maintained the benchmark at 6.5%, the EU’s highest rate. Varga emphasized the need for tight monetary conditions and forecasted inflation to slow gradually.

Inflation has become a concern for Prime Minister Viktor Orban, as his party faces a cost-of-living crisis ahead of elections. The government imposed profit curbs on food staples, leading to an 18% drop in affected product prices. Varga, newly appointed central bank chief, prioritizes price stability.

The central bank raised its inflation forecast to 4.5% to 5.1% for this year, up from 3.3% to 4.1%. Money market traders expected rate cuts after Varga’s remarks, but the central bank’s guidance tempered those expectations. The inflation peak in February may lead to a gradual slowdown starting in March.

Read more: Hungary Holds Key Rate With Varga Echoing Previous Guidance