Commerzbank analysts are forecasting Hungary’s central bank will restart its rate-cutting cycle, with consensus expectations pointing to a 25 basis point reduction in the coming decision. The move comes as inflation has come in lower than anticipated while the Hungarian Forint has maintained strength against major currencies, creating favorable conditions for monetary easing according to Commerzbank’s Michael Pfister.
Despite the anticipated cuts, Hungary’s real interest rates are expected to remain elevated even after easing measures take effect. The central bank had previously paused its rate-cutting cycle but market conditions now appear supportive of resuming the downward trajectory. The combination of currency stability and cooling inflation gives policymakers confidence to loosen monetary policy without risking currency volatility or reigniting price pressures.
Traders should watch for potential Forint weakness if the rate cut materializes, though the currency’s recent resilience suggests markets may have already priced in the move.
FXnCO Insight
Position for potential HUF volatility around the rate decision, but strong fundamentals suggest any currency weakness should be contained compared to regional peers.
Source: FXStreet