HUF: Hawkish NBH stance tempers easing hopes – ING

ING economists Peter Virovacz and Zoltán Homolya note that the National Bank of Hungary (NBH) kept its base rate at 6.25% in March 2026 and shifted to a more hawkish stance after the war in the Middle East. They still see a chance of a rate cut in late 2026 if their base case on energy prices and geopolitics holds.

NBH holds rates but keeps options open

"In line with our expectations, the Monetary Council decided to keep the base rate at 6.25% on 24 March. Unsurprisingly, in light of the war in the Middle East and related market turmoil, the National Bank of Hungary has reverted to a hawkish stance. We agree with the central bank’s view that it is too early to press the panic button."

"As headline inflation hit a ten-year low in February, Hungary will be hit by the external price shock in a favourable position. Using our base case for energy prices, we predict that, after a brief period of acceleration, inflation will stabilise at around 4% in the second half of the year. If our base case holds (40% chance) and the impact of energy prices fades as expected, inflation will remain within the National Bank of Hungary’s tolerance band."

"If flows through the Strait of Hormuz return to normal by the summer, as we currently expect in our base case, our growth, inflation and foreign exchange trajectory suggests there will be room for a rate cut late in the third quarter. Therefore, we predict that the base rate will be 6.00% by the end of the year. However, if our 'long war' scenario plays out (30% chance), we believe that the forint would require additional support, and the NBH could follow the ECB's lead with the same number of rate hikes (most likely two) during the next couple of quarters."

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