NBH holds, but June is now the live meeting
The NBH left the base rate unchanged at 6.25%, in line with our preview.
April CPI at 2.1% YoY and core inflation at 2.2% give the Bank a clear domestic case for lower rates, but not enough to justify an immediate cut. The decision validates a cautious hold, while the statement shifts attention firmly to the June Inflation Report.
The inflation language was dovish. The NBH said incoming data point to a more moderate inflation outlook, helped by the stronger forint, lower household inflation expectations, and delayed changes to fuel-price and margin-cap measures.
Lower risk premia have also widened policy room, with the Bank linking the durability of this improvement to EU funds, the fiscal outlook and Hungary’s euro-adoption path.
That said, June is live, not guaranteed. The NBH still stresses positive real interest rates, tight monetary conditions and a careful, data-driven approach. Stronger HUF, lower CPI, reduced risk premia and EU-fund progress all argue for a more dovish rate path.
But higher energy and commodity prices, second-round risks, fiscal uncertainty and wider geopolitical risks argue for patience, especially given Hungary’s position as a net energy importer.
For HUF, the decision is mildly supportive. The hold preserves carry and confirms that the NBH is not rushing to cut, while the improved inflation outlook keeps a June move in play. If EU-fund progress continues and energy risks fade, a June cut becomes easier to justify. If geopolitical risks persist, easing could slip beyond the summer. HUF remains supported for now, but the next leg depends on whether the June Inflation Report confirms active preparation for a cut or merely cautious optionality.