Part I — Situation overview

In the summer of 2026, one of the most important pieces of news in Hungarian economic policy is not a loud scandal, but a cool set of figures. The Hungarian National Bank (MNB) significantly revised its inflation forecast downwards at the end of June: instead of the 3.8 per cent average annual increase still expected in March, it now anticipates a 1.8 per cent price rise for 2026, and for the second half of the year places the path close to the lower edge of the central-bank target band — the tolerance band of ±1 percentage point around 3 per cent. According to Portfolio’s analysis, everyone “immediately reconsidered” the fresh forecast: market expectations moved lower, and the central bank stepped onto a rate-cutting path — experts consider a 25-basis-point (a basis point is one hundredth of a per cent) step likely for both July and August. The MNB names as reasons for the moderation the fall in energy prices, the strengthening of the forint, low world-market food prices, and the effect of the margin cap (the state limitation of the retail margin that may be applied to basic foodstuffs).

The picture is not cloudless, however. In the same week Portfolio wrote that “the election upset the Hungarian budget”, and according to fresh analyses this year’s deficit is larger than earlier communicated; and Telex’s economic workshop, G7, reported that some of the special taxes introduced in the crisis years “will be with us for a long time yet”. Meanwhile Magyar Nemzet revives the campaign debate over the introduction of the euro. That is, while the monetary side — prices and the interest rate — turns more favourable, tensions remain on the fiscal side, in the balance of revenue and expenditure of the budget.

MIAK’s reading is that this very duality is the essence of the topic: lower inflation does not mean the disappearance of the economic-policy problems, but opens a narrow room for manoeuvre. The question is whether the government of the day spends this room, or uses it for a lasting, rules-based ordering of the budget. The fresh data is not a victory report, but a test: it will reveal whether Hungarian economic policy can stay disciplined even in a good conjuncture — in the upward phase of the economic cycle.

Part II — Literature foundation

Before turning to MIAK’s concrete proposals, it is worth fixing the conceptual frame in which the present situation can be interpreted. Kornai János (an economist of Hungarian origin, the elaborator of the theory of the soft budget constraint, a Harvard professor between 1986 and 2002) showed that where the state regularly bails out the losing actors, economic management detaches from real solvency — in the present situation this is the risk of the quiet maintenance of the special taxes and of uncovered promises. Carmen Reinhart and Kenneth Rogoff (Harvard economists who worked up the eight-century history of financial crises) described the illusion that “this time everything will be different”: decision-makers in calm periods are inclined to believe that the old laws of debt dynamics do not apply to them — it is precisely this confidence that typically precedes trouble. And the OECD’s Economic Outlook 2026 places the Hungarian macro-path in an international context, recalling that disinflation (the slowing of price rises) in an open, energy-dependent economy is a fragile process exposed to external shocks. The detailed literature treatment — by author, with quotations — can be found in the 6.4 Literature in detail section.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures that would turn the fresh inflation correction not to spending, but to the lasting ordering of the budget — without austerity, with predictable rules.

3.1 Respect for central-bank independence and fixing the fiscal-monetary division of labour (immediate)

The first and most important principle costs not a penny: the Monetary Council decides on the central-bank base rate, and the MNB’s independence is guaranteed by the Fundamental Law and the central-bank act — the government may not lawfully instruct monetary policy. MIAK asks the government of the day not to communicate the now-favourable inflation turn as its own achievement, and not to exert open or covert pressure on the rate path. A clean division of labour — the central bank responsible for price stability, the government for a sustainable budget — in itself creates trust and predictability, which makes financing the state cheaper. This principle is the institutional precondition of the G1 data-driven budget.

3.2 Rule-based, counter-cyclical consolidation instead of austerity (2026–2027)

The moderating inflation and the rate cut open a window for ordering the deficit — but according to MIAK this should be achieved not through sudden austerity, but through a pre-fixed, counter-cyclical fiscal stabiliser (state spending in a downturn, reserve-building in an upturn). The G15 programme point describes exactly this: in the current upward phase — in a boom — the budget must build a reserve, so that the next shock does not force uncovered borrowing. In practice this means that the room arising from falling inflation and any released EU funds should be turned not to new, lasting expenditure commitments, but to reducing the debt path and refilling the buffer. The goal is to operate the G23 public-debt-sustainability framework: a predictable downward path without spectacular sacrifices.

3.3 A time-banded, impact-assessment-tied phase-out of the special taxes (2026–2028)

The maintenance or phase-out of the special taxes — the sector-specific burdens introduced in the crisis years — cannot be a communications decision, but a data-driven one. MIAK proposes a time-banded phase-out: a pre-announced abolition scheduled in several steps, to which a mandatory impact assessment is attached before each step. This should be carried out within the G20 Drucker audit — the ex-post measurement of measures according to expected versus actual results: it must be measured how much revenue the maintenance of a given special tax brings, what price-raising or investment-dampening effect it has, and in what sequence it can be phased out without endangering the budget. This can be linked with the G3 tax reform: fewer, more transparent tax types, on a predictable path.

These three proposals are bound together by a single principle: good news demands discipline, not loosening. The fresh inflation data becomes a lasting advantage if the rule-based, data-driven budget protects it from the next cycle — exactly as the warnings of Kornai and Reinhart–Rogoff suggest.

Part IV — Expected impacts and risks

Dimension Expected impact Risk
Economy Lower inflation and rate → cheaper financing, reviving investment The soft budget constraint: the released room goes on lasting, uncovered expenditure
Society Protection of real wages, moderation of household loan burdens If the special taxes are quietly rolled over into consumer prices, part of the gain is lost
Public administration Predictable, rule-based planning, strengthening market trust Apparent or actual damage to central-bank independence → more expensive public-debt financing

The main trade-off is the following: disinflation is fragile and partly depends on external factors (the energy price, the forint exchange rate, world-market food prices). If these turn, inflation can rebound — which is why it would be a mistake to treat the current favourable moment as if the problem had been finally solved. The proposal works if consolidation is rule-based and counter-cyclical: it automatically builds reserves in good times. It tips to the risk side if the short-term logic of the political cycle — room “distributable” from moderating inflation — overrides medium-term sustainability. Reinhart and Rogoff documented exactly this pattern across centuries.

Part V — Measurability and summary

5.1 What is worth tracking? (suggested KPIs)

MIAK considers the following suggested performance indicators (KPIs, in English: Key Performance Indicator) worth tracking over a 6–24-month horizon:

  • Actual inflation in the target band: whether the consumer-price index measured by the KSH (Central Statistical Office) stays durably in the 3% ±1 percentage-point band.
  • Improvement of the primary balance: whether the general-government balance excluding interest expenditure improves year by year as a share of GDP (gross domestic product).
  • Publicity of the special-tax phase-out schedule: whether a pre-announced, impact-assessment-tied time-banded plan exists — or whether the system remains ad hoc and unpredictable.
  • Direction of the debt path: a falling trend of GDP-proportionate public debt without taking on new lasting expenditure commitments.

These are suggestions, not government decisions — MIAK considers worth tracking what shows, on a factual basis, whether the direction is good.

5.2 Summary

MIAK’s key message is simple: moderating inflation is a gift, but not an alibi. The fresh data will be a lasting gain if the government respects central-bank independence, orders the deficit by a rule-based, counter-cyclical route — not with austerity — and phases out the special taxes on a transparent, impact-assessment-tied schedule. MIAK asks this of the decision-maker and the public: let us use the good news not for the next campaign, but to prepare for the next crisis.

The topic moves two MIAK foundational values. Data-drivenness is at stake because the fate of the special taxes and the pace of consolidation must be decided not on a communications basis, but on measured, provable effects. And accountability, because the rule-based budget and the public, pre-fixed schedule make it possible to check afterwards whether the government kept to its commitments — as opposed to the opacity of burdens levied case by case.

Part VI — Justifications and further sources

6.1 Press framing by spectrum

The economic-liberal band (Portfolio, Telex/G7) treated the topic primarily as a macroeconomic and sustainability question: Portfolio put the central-bank forecast revision and the rate path at the centre, while Telex’s G7 workshop dissected the persistence of the special taxes and the distortions of the revenue structure — the framing here is technical and data-centred. In the public-affairs-economic reading (Portfolio’s “upset budget” article) the emphasis fell on the post-election fiscal legacy and the 2027 room for manoeuvre. The pro-government-conservative band (Magyar Nemzet), by contrast, highlighted not the monetary data but the campaign debate over introducing the euro, in a “one of the biggest cons of the electoral fight” frame — that is, it strengthened the political reading of the topic instead of the professional one. The liberal-left domestic-politics papers (Telex, HVG, 444.hu) that day rather ran the constitutional and accountability topics on the front page, and treated the MNB decision as a secondary, specialist-page item. In the spirit of being ideology-free it should be recorded: the question of moderating inflation and a sustainable budget is not side-dependent — the argument for rule-based discipline is defensible from both left and right.

6.2 Facts and data

Indicator Value Source
2026 average annual inflation — March forecast 3.8% MNB, Portfolio 6 July 2026
2026 average annual inflation — June forecast 1.8% MNB, Portfolio 6 July 2026
Expected rate step (Jul.–Aug., monthly) −25 basis points Portfolio analyst consensus, 6 July 2026
Central-bank inflation target band 3% ±1 percentage point MNB
December 2025 inflation 4.3% KSH
2025 GDP growth (preliminary) +2.1% KSH

The direction of the figures is clear: disinflation is fast and decisive, but the starting point (end of 2025: 4.3%) shows that the turn is fresh — which is why sustainability depends on planning, not on the momentary data.

6.3 Policy aspects

  • Economy (programme points) — macro-fiscal stability, the counter-cyclical stabiliser (G15) and the data-driven budget (G1) are the gravitational centre of the topic;
  • Transparency and anti-corruption policy (programme points) — the publicity of the special taxes and public-money use falls within the scope of the public-money dashboard (A1).

6.4 Literature in detail

6.4.1 Kornai János: A hiány (Economics of Shortage)

Kornai János’s life’s work is built around the soft budget constraint: there, where the economic actor knows that its loss will ultimately be bailed out by the state, its behaviour detaches from its own solvency, and the place of discipline is taken by the expectation of a paternalist bailout. The phenomenon is true not only of companies — at the state level, uncovered promises and the “it will sort itself out” logic follow the same pattern. In the current Hungarian situation this means: if moderating inflation opens room, the temptation of the soft constraint is to turn this to lasting, uncovered expenditure or the quiet rolling-over of the special taxes, instead of choosing rule-based consolidation.

📖 Source: Kornai János: A hiány (1980)

6.4.2 Reinhart–Rogoff: This Time Is Different

Reinhart and Rogoff, reviewing eight centuries of financial crises, concluded that sovereign default and inflation crisis are a recurring, almost universal phenomenon — trouble is typically preceded precisely by that decision-maker and investor confidence that “this time it will be different”. The calm years, the falling rates and the good data lull vigilance, and the laws of the old debt dynamics are temporarily thought invalid. The Hungarian lesson: the current favourable inflation turn is exactly the moment when the “we’re fine now” feeling is most dangerous — which is why discipline must be embedded in a rule, not in a mood.

📖 Source: Reinhart–Rogoff: This Time Is Different

6.4.3 OECD: Economic Outlook 2026

The OECD’s 2026 outlook places the Hungarian path in an international frame: disinflation is happening worldwide, but in an open, energy-dependent economy it is fragile and strongly exposed to external shocks (energy price, exchange rate, world-market food prices). The analysis highlights a sustainable, medium-term downward debt path and a credible budget framework as the condition of trust and cheaper financing. In the Hungarian interpretation this supports MIAK’s proposal: it is not the momentary good data, but the rule-based framework, that decides whether the moderation remains lasting.

📖 Source: OECD: Economic Outlook 2026

6.5 International comparison

The handling of the disinflationary turn is not a Hungarian peculiarity. In several economies of the region — at the Czech and Polish central banks too — it is a recurring experience that the rapid moderation after the inflation peak opens a window for rate cuts, but the lasting result is decided by the discipline of the fiscal side: where the government turned the released room to new lasting expenditure, inflation rebounded sooner. This is the operational confirmation of what Reinhart and Rogoff showed on historical data: the rule-based, counter-cyclical framework (the direction also recommended by the OECD) is the difference between momentary and lasting success.

Economy

  • G1 — Data-driven budget
  • G3 — Simplification of the tax system and progressive reform
  • G15 — Counter-cyclical fiscal stabiliser
  • G20 — Economic-policy impact-assessment system (Drucker audit)
  • G23 — Public-debt-sustainability framework

Transparency and anti-corruption policy

  • A1 — Public-money dashboard

6.7 Source register

Press sources (MIAK press monitor, 6 July 2026 — topic 2):

Knowledge-base references (literature):

  • 📖 Kornai János: A hiány (1980)
  • 📖 Reinhart–Rogoff: This Time Is Different
  • 📖 OECD: Economic Outlook 2026

Note: in the blog’s visible text the book’s local file path does not appear — only the author and the title. The file path is an internal matter of the generation process, not the reader’s.

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G1, G15)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A1)
  • MIAK press monitor, 6 July 2026 — topic 2, score: 85/100

Additional public data sources:

  • MNB Inflation Report; KSH consumer-price-index time series; Eurostat deficit/debt data

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