Hungary’s central bank reduced its forecast for gross domestic product growth in 2026 to 1.7% from an earlier projection of 2.4%, the bank said Tuesday. The revision comes alongside a policy message that future choices on the central bank base rate will be guided by a cautious, data-driven process.
Officials indicated that maintaining tight monetary conditions continues to be appropriate. The bank underlined that a stability-oriented monetary policy is warranted, citing the role of a steady foreign exchange market in containing inflation expectations.
On inflation dynamics, the central bank noted that the pass-through of higher energy prices will contribute to an increase in the rate of price growth beginning in March. That upward pressure on consumer prices will be partly offset, on a temporary basis, by the effect of price caps implemented for fuels.
Looking further ahead, the bank said inflation is projected to move above its tolerance band from the third quarter of 2026. The institution expects inflation to return to the central bank target in a sustained fashion in the second half of 2027.
The central bank characterized the March projection baseline as surrounded by asymmetric risks - with mostly upside risks to inflation and mostly downside risks to growth. Among the factors cited, surging energy prices are weighing on the expansion of Hungary’s export markets, the bank said.
Policy guidance in the statement emphasized two linked priorities: keeping monetary settings tight enough to guard against entrenched inflation expectations, and supporting foreign exchange market stability as part of that effort. Decisions on the base rate will be taken with caution and will rely on incoming data.
The bank’s narrative ties higher energy costs directly to both domestic price pressures and external demand for exports, signaling that energy price developments are a key channel shaping both inflation and growth outlooks.
No additional numerical projections beyond the revised 2026 GDP figure and the broad timing for inflation developments were provided in the statement. The central bank’s assessment frames the near-term outlook as one with elevated inflationary upside risk and constrained growth prospects.