National Bank of Hungary review: All eyes on the next staff forecast
The desk projects further monetary easing by the National Bank of Hungary, anticipating three additional rate cuts in the coming months. Following the recent cut to 5.50% as part of a planned 'mini cycle' of reductions, markets are shifting their expectations as inflation appears manageable and EU funds are on track to be deployed. Per the full note from ING, ongoing geopolitical tensions and local energy concerns may limit the forint's recovery, but we expect a positive outlook as these are thought to be temporary obstacles.
What the desk is arguing
The desk maintains that the National Bank of Hungary is on a continued path of easing, influenced by pre-announced plans and current economic conditions. As indicated in the commentary from ING, three additional rate cuts could bring the base rate down to 4.75% by the end of 2026, reflecting a sustained commitment to monetary support.
Notably, despite challenging conditions such as elevated geopolitical risks and energy supply issues, the forint has shown resilience. The commentary highlights that EUR/HUF moved closer to 366, indicating a weaker currency position, yet the desk views this as a transient situation linked to current market positioning rather than a long-term trend.
Where it sits in our coverage
Consistent with our analysis, we anticipate a base rate target of 4.75% by late 2026, with firms such as jpmorgan predicting a similar trajectory at 4.80%, while bofa aligns with a cautious approach forecasting 5.00%. Given these projections, our desk's views are situated more optimistically within the wider consensus.
How other firms see it
Among aligned firms, jpmorgan and dtc share a similar dovish outlook on the Hungarian monetary policy, suggesting further cuts will align with a stabilizing economic environment. In contrast, some firms remain wary, with bofa expressing skepticism about aggressive easing amidst external pressures.
Close attention should be paid to the movements of EUR/USD, which might reflect sentiments towards the Eurozone and its interconnectedness with Hungarian policy adjustments. Additionally, fluctuations in energy prices will be crucial in gauging potential impacts on inflation and broader economic stability.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Expect three more rate cuts in Hungary, bringing the base rate to 4.75% by late 2026.
- 02Current economic challenges may be temporary, with projections for limited inflation threats.
- 03EUR/HUF has weakened significantly, reflecting market sentiment and regional volatility.
- 04EU fund deployment expected in Q4 could provide a stability boost.
Market implications
Watch for EUR/HUF around the 366 level as a critical threshold. If it moves further, this could signal deeper market concerns impacting the forint. Additionally, any announcements or movements related to EU funds would influence trader sentiment significantly.
Risks to this view
Key risks include unexpected inflation spikes or major shifts in geopolitical conditions that would necessitate changes in the central bank's easing strategy. A failure to secure anticipated EU funding could also lead to reassessments of current economic forecasts.
Articles National Bank of Hungary review: All eyes on the next staff forecast Published 14:00 Hungary Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download In line with the pre-announced 'mini cycle', the National Bank of Hungary continued to cut rates in August. While this chapter ends here, we think the Monetary Council is not done with easing. We expect three more rate cuts this year Peter Virovacz , Frantisek Taborsky and Zoltán Homolya We forecast three further rate cuts in Hungary this year 5.50% Key interest rate (-25bp) As expected ING's policy view: We see scope for further cuts in the autumn The National Bank of Hungary cut the base rate to 5.50% on 25 August, as was signalled at the rate-setting meeting in June when Governor Varga announced a 'mini rate cut cycle' throughout the summer.
Looking ahead, we expect policymakers to stick to the euro adoption roadmap, particularly the planned medium-term fiscal path, with EU funds set to arrive in the fourth quarter as expected. We expect inflation to remain low and stay below the central bank’s target for the rest of the year, although we anticipate some acceleration in the months ahead. While external risks are mounting again, we forecast three further rate cuts this year if the risk premium for Hungarian assets remains broadly unchanged.
This would put the base rate at 4.75% by the end of 2026, with a terminal rate of 4.00% by the end of 2028, in our view. ING’s market views The Hungarian forint repeatedly tested the 366 EUR/HUF level in August, its weakest level since the April elections. A mix of global geopolitical uncertainty, local energy supply concerns and crowded long positioning pushed EUR/HUF higher.
Despite higher rates volatility, markets still maintain a dovish bias on Hungary relative to the rest of the region, leaving the overall backdrop unfavourable for the forint. That said, most of these headwinds should prove temporary, and we expect market sentiment to turn more supportive again. In our view, EUR/HUF remains rangebound, with less scope for a rally than in fixed income.
Still, levels above 364 look cheap if global sentiment improves. Rates now price in around 50bp of easing, keeping Hungary an outlier within EMEA. Despite repeated downside inflation surprises, markets have stayed cautious amid geopolitical risks and reduced rate cut bets compared to early August.
We see scope for more easing to be priced in and for the curve to steepen, although – as with FX – this depends on some improvement in global sentiment. Our three takeaways from the press conference Overall, the macroeconomic outlook is broadly in line with the June inflation report: the industrial sector contributed positively, while the agricultural sector weighed on performance more than anticipated. Inflation was lower even under the central bank’s most optimistic scenario, and although global energy prices rose slightly, inflation expectations declined across the board.
Looking ahead, these data may provide a basis for an optimistic September inflation report. In our view, the general environment is favourable for a rate cut in the next decision. The September inflation report will be of decisive importance in determining the interest rate path for the coming months.
Varga stated that the NBH has begun a review of the inflation-targeting framework, the results of which will be published in the autumn. We believe the review will be released before the government publishes its medium-term budget plan. In our view, there is a possibility that it will be published in conjunction with the September inflation report.
Varga once again emphasised the importance of foreign exchange market stability in reducing and anchoring inflation expectations, as these expectations have shown improvement recently. We believe that the central bank’s primary objective is to maintain the EUR/HUF exchange rate within its most recent range of 355–365. Review Policy rate NBH National Bank of Hungary Monetary policy 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 ING's policy view: We see scope for further cuts in the autumn ING’s market views Our three takeaways from the press conference
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