Hungary: Lower CPI supports NBH cuts – Standard Chartered

Standard Chartered’s Saabir Salad emphasizes that subdued inflation, aided by a strong Hungarian Forint (HUF) and government measures, has allowed the National Bank of Hungary (NBH) to turn more dovish. Salad cuts his 2026 and 2027 Consumer Price Index (CPI) forecasts and notes NBH projections below target, but still sees upside inflation risks that could slow the easing pace if realized.

Subdued CPI but upside risks remain

"Inflation has remained subdued despite the energy price shock, supported by a strong HUF and government measures, including fuel price caps."

"Headline CPI came in at 1.8% y/y in May, below both our 2.2% forecast and the lower bound of the NBH’s 3% +/-1ppt target range."

"In light of this, we lower our 2026 inflation forecast to 2.2% (from 3.9%, still above the central bank’s forecast), and our 2027 forecast to 2.5% (3.4%)."

"While the central bank assesses inflation risks as balanced, we continue to see risks as skewed to the upside given Hungary’s vulnerability to geopolitical instability."

"The pace of easing could be slower if inflation proves higher than we expect."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)