No change from the MNB and Moody's, difficult talks with EU continue, and further steps are made towards democracy

HUNGARY - In Brief 26 May 2026 by Istvan Racz
Really a lot is happening in these days. Today, the MNB kept the base rate unchanged at 6.25%. The Council discussed a hold and a rate cut scenario, Mr. Varga said after the meeting, and there was (were?) also vote(s?) supporting a rate reduction as well. Positives observed by the Council included mainly the favourable change of sentiment towards Hungary, expressed in the strong forint and lower HUF bond yields, whereas negatives included the the uncertainties of the external environment and the momentary lack of information on the new government's prospective economic policies. The big majority of local analysts polled by Portfolio.hu expected the base rate to remain unchanged this month, but the majority of the same experts expects a rate cut in June already. We are not sure about a rate cut next month, as the government is unlikely to make any great progress with formulating and communicating its fiscal and income policies,  including longer-term plans on the intended euro convergence, by that time. Moody's kept its Baa2/Negative sovereign rating unchanged last Friday. This was once again in line with expectation. Their second review this year, due on November 20, will be much more interesting, as by that time a lot more will be most likely known about Tisza's fiscal policies and progress on access to EU funds. Moody's actually stressed the importance of EU relations, saying that improvement on those would affect their Hungary rating positively. S&P and Fitch Ratings are set to hold their first reviews on Hungary on May 29 and June 5, respectively. They are widely expected to follow Moody's example, holding their rating decisions until their second reviews of this y...

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