Hungary’s central bank governor said on Thursday that inflation expectations must be anchored in order for the bank to reach its inflation target in a sustainable manner, adding the fight against inflation is not yet over.
The central bank left its benchmark base rate steady at the European Union’s joint-highest 6.5% level for the seventh straight month in a unanimous decision in April, and said a careful and patient approach to monetary policy was still needed amid inflation risks.
The next rate-setting meeting is due on May 27.
Governor Mihaly Varga told a conference organised by news site Portfolio.hu that there are still great uncertainties surrounding U.S. tariff talks.
“Curbing inflation expectations… is key to reaching the inflation target in a sustainable way,” said Varga.
Hungarian inflation exceeded 5% in the first two months of the year before retreating to 4.8% in March and 4.2% in April.
At a time when an economic recovery has lagged expectations, Prime Minister Viktor Orban is struggling to rein in the cost of living in the run-up to a 2026 national election – when he is facing a tough challenge from a rising new opposition party.
Speaking about the outlook for the economy, Varga also said that while Hungarian retail lending was on the rise, corporate lending was still weak which must be addressed. The central bank would hold talks with commercial banks on ways to reduce banking costs and revive corporate lending, he said.