BUDAPEST, March 25 (Xinhua) -- The National Bank of Hungary (MNB) kept its base rate unchanged at 6.5 percent on Tuesday, maintaining a tight monetary stance amid elevated inflation risks.

At its monthly meeting, the Monetary Council also left the overnight deposit rate at 5.5 percent and the overnight collateralized loan rate at 7.5 percent, keeping the interest rate corridor unchanged.

MNB Governor Mihaly Varga said the central bank would pursue a "careful" and "patient" policy, as inflation is now expected to remain above target longer than previously forecast.

"Maintaining strict monetary conditions is justified," he told a press briefing, citing upside risks to inflation as well as trade and geopolitical tensions.

The inflation target of 3 percent may only be approached by late 2026, with average inflation this year projected in the 4.5 to 5.1 percent range. The MNB sees inflation easing to 2.9-3.9 percent in 2026 and 2.5-3.5 percent in 2027.

Varga said the government's recent cap on retail margins for certain food products could reduce inflation by 0.8 percentage points in April and May. Inflation peaked in February, he added, with a gradual slowdown likely starting in March.

He noted a more balanced economic growth structure, with gross domestic product (GDP) expected to rise by 1.9 to 2.9 percent in 2025, supported by real wage gains and tax cuts. Growth is forecast to accelerate further in 2026 and 2027.

Varga also signalled a shift in central bank operations, saying the MNB would reduce or suspend non-core activities, including those linked to its foundations, to improve transparency and efficiency. Enditem

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