Hungarian Forint: Recovery tied to euro entry story – ING

ING’s Chris Turner reports that the National Bank of Hungary cut its policy rate by 25bp to 5.50%, with Chief Economist Peter Virovacz seeing a 4.75% terminal rate. The euro entry narrative and a future shift of the inflation target to 2.00% support Hungarian assets, with year-end EUR/HUF and 10-year yield forecasts at 350 and 4.75%.

Rate cuts and euro convergence theme

"As expected, the National Bank of Hungary cut its policy rate by 25bp to 5.50% yesterday. ING's Chief Economist in Hungary, Peter Virovacz, sees a 4.75% terminal rate here – although the NBH was providing little forward guidance yesterday."

"Providing broad support for Hungarian assets is the euro entry story. Part of this will be, at some stage, a re-orienting of the inflation target to 2.00% from its current 3.00%."

"We are reminded of the great run enjoyed by South African assets last year when the South African Reserve Bank pushed for a lower inflation target (agreed November 2025) at 3.00% from 4.50% prior."

"We currently have year-end forecasts for EUR/HUF and ten-year Hungarian Government bond yields at 350 and 4.75% versus levels today at 360 and 5.43%."

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