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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
The desk anticipates that the National Bank of Hungary (NBH) will maintain its interest rates at the next meeting, reflecting a cautious approach amid ongoing uncertainties surrounding the government's 2027 budget. Per the full note from ING, while inflation is under control, central bank officials are likely to prioritize fiscal developments over immediate monetary adjustments. Expectations are set for a potential rate cut by year-end, contingent on the market's reception of the budget details coming soon. As the central bank navigates this delicate landscape, the mixed economic signals make the outlook less definitive.
The desk believes that the NBH will hold rates steady during the 20 October meeting amidst fiscal uncertainties, as indicated in ING's analysis. The lack of substantial changes since the previous meeting supports a cautious stance, particularly with details of the 2027 budget not being public yet, which could affect market perceptions.
Support for this projection stems from the central bank’s recent communication, which has highlighted the importance of the fiscal plan over current inflation metrics. ING pointed out that the inflation situation is favorable; however, a premature monetary policy decision based on the undisclosed budget details could undermine the central bank’s credibility.
Our current consensus target for EUR/HUF is 1.075, with a range spread from 1.04 to 1.12. This aligns with key forecasts from firms such as: - jpmorgan with a target of 1.10 for Mar26 - bofa predicting a more conservative 1.04 for Mar26
The desk's expectation of a stable interest rate falls in line with the general outlook from bofa, while it leans towards the higher end of the target projections when considering market sentiment towards future fiscal policies.
Firms like jpmorgan and others are aligned in expecting stability from the NBH, while bofa trends towards a more pessimistic outlook, suggesting a lower rate environment will persist. The consensus is therefore centered around cautious positioning with respect to the HUF.
The trajectory of the EUR/HUF should be monitored closely; shifts in the eurozone's economic landscape, particularly any announcements regarding ECB policies, could impact the HUF's performance as it adjusts to domestic fiscal narratives.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Traders should closely watch the EUR/HUF exchange rate as the NBH meeting approaches, particularly for signals in response to the 2027 budget announcement. A sustained rate hold could stabilize the HUF in the short term.
Risks to this view
A reversal in the desk's call could occur if the budget is heavily criticized or deemed insufficient by the Fiscal Council, leading to a loss of market confidence. Additionally, unexpected inflation spikes could prompt a premature rate adjustment from the NBH.
Articles National Bank of Hungary preview: Room to cut, but caution prevails Published 13:00 Hungary Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Although the inflation outlook remains favourable, the Monetary Council will likely err on the side of caution at the 20 October meeting, amid uncertainty surrounding the 2027 budget and prevailing risk sentiment. However, we still expect a rate cut by year-end Peter Virovacz , Frantisek Taborsky and Zoltán Homolya We expect the National Bank of Hungary to play it safe and keep rates on hold on 20 October Our call The National Bank of Hungary (NBH) picked the cautious option last month, keeping the base rate unchanged. We haven’t seen enough of a change since the September rate-setting meeting to think that this time will be different.
Central bank representatives have repeatedly pointed to two key developments, and neither of them is inflation. The inflation situation remains benign, shifting the focus to the 2027 draft budget and the medium-term fiscal consolidation plan. While the government handed the budget to the Fiscal Council on 15 October, the details are not yet public.
The timing puts the central bank, and especially Governor Varga, in a delicate position. The Fiscal Council has three members: the chairman, the president of the State Audit Office and the governor of the National Bank of Hungary. This means Varga and the NBH staff will have information on the 2027 budget, but it would look ill-advised to make a monetary policy decision based on it before the details enter the public domain.
We wouldn’t rule out the Fiscal Council publishing its opinion before the rate-setting meeting, followed by an announcement from the Ministry of Finance. Still, that won't leave enough time for the Monetary Council to gauge the market reaction before committing to a rate decision. A sound and credible 2027 draft budget and a well-received medium-term fiscal consolidation plan could create a favourable idiosyncratic shock, reducing risk premiums on Hungarian assets.
However, the durability of such a move would remain a question mark. Against a backdrop of elevated global uncertainty, and despite the prospect of lower local risk premiums, we expect the National Bank of Hungary to play it safe and keep rates on hold on 20 October. Looking ahead, we still expect monetary easing before year-end.
Our assumption is that domestic developments will open the door to a 25bp rate cut in December, leaving the base rate at 5.25% at end-2026. With expected structural market support from credible budget plans and inflation hovering around 2.0-2.5% YoY in early 2027, we expect further easing to follow. We forecast a terminal rate of 4.25% next year.
Our market views Hungary remains the key CEE story, with by far the largest long positioning across asset classes, driven by the idiosyncratic post-election narrative and prospects for euro adoption. Currently, the primary market focus is on fiscal policy and the draft budget for next year, rather than on monetary policy itself. In our view, market expectations regarding next year’s fiscal deficit are shifting downward, and we believe that an excessive degree of optimism has already been priced in.
Consequently, it will be difficult for the government to deliver a positive surprise, even though the overall narrative is clearly moving in a positive direction. Given the global situation and massive long positioning, markets appear fragile; from our perspective, it makes little sense for the NBH to test the market in such an environment. Market pricing points to one additional rate cut, assuming that BUBOR returns to a level above the key policy rate by the end of the easing cycle.
With global energy prices hitting new highs, it would not be surprising if the market were to price out these remaining bets on rate cuts, especially given the distinctly hawkish pricing seen elsewhere in the region, though we keep rate cuts in our own forecast. A more hawkish market stance, combined with the government’s ongoing steps toward euro adoption, should be positive for the forint. On the other hand, one cannot ignore adverse global conditions, such as higher energy prices, a strong US dollar, and troubles within the eurozone bond market.
These factors make gains for the forint challenging to achieve, yet our FX outlook remains bullish. From the perspective of euro adoption, trades involving rates and bonds and further spread compression are much more reliable bets than FX, based on the experience of previous euro adoption cases. However, the two most popular trades – long-end Hungarian Government Bonds (HGBs) and 5y5y IRS vs.
EUR – are hitting their lows, suggesting that a significant amount of good news is already priced in. Regarding bonds, historical precedent indicates that the spread should settle in the 50-120bp range by the time of entry into ERM II. Currently, the spread has just hit 200bp, yet we are still more than two years away from ERM II entry.
Overall, while the underlying narrative remains bullish, we prefer to buy on dips at this stage. Some background Inflation developments remain supportive from a monetary policy perspective. Despite the global energy shock, headline inflation has remained subdued, inching up to just 1.6% YoY in September , while core inflation ticked down by 0.1ppt to 1.9% YoY.
We expect price growth to remain below the central bank’s target for the rest of the year and throughout the first half of 2027. The forint has proved more resilient to recent global sell-offs than in previous episodes. While EUR/HUF briefly approached 370, this level proved to be a hard ceiling.
After the volatility seen in early October, the forint regained its footing and strengthened below 364 again. We believe this partly reflects elevated expectations surrounding the fiscal plans, with markets anticipating a frontloaded consolidation and a deficit target below 5% of GDP in 2027. While this looks ambitious, we believe it is within reach, though by no means automatic.
Hungarian government bond yields have also absorbed the deterioration in global sentiment relatively well, supported by expectations of fiscal consolidation. If the government delivers, further convergence towards the eurozone could be priced in. This could give the NBH more room for manoeuvre, while lower refinancing costs would also ease pressure on the budget.
NBH Preview NBH National Bank of Hungary Monetary policy Interest rates Hungary Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Peter Virovacz Chief Economist, Hungary Peter Virovacz is a Chief Economist in Hungary, joining ING in 2016.
Prior to that, he has worked at Szazadveg Economic Research Institute and the Fiscal Council of Hungary. Peter studied at the… Frantisek Taborsky EMEA FX & FI Strategist Frantisek is an FX & FI Strategist covering EMEA markets, having joined the bank in 2022. He provides short- and medium-term recommendations for ING's corporate and institutional client… Zoltán Homolya Economic research trainee Zoltán Homolya works as an Economic Research trainee at ING, where he has been employed since July 2025.
He is a student at Budapest University of Technology and Economics, majoring in… In this article Our call Our market views Some background
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