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 National Bank of Hungary reduced its policy rate by 25 basis points to 5.50% yesterday, according to ING's Chris Turner. Chief Economist Peter Virovacz expects a 4.75% terminal rate, aligning with forecasts of EUR/HUF at 350 and 10-year yields at 4.75% by year-end. The euro entry narrative and a potential shift of the inflation target to 2.00% are providing broad support for Hungarian assets.
As seen with South African assets last year, a lower inflation target could bolster Hungarian currency and bond yields. Current forecasts anticipate EUR/HUF at 350 and 10-year yields at 4.75%, compared to today's levels of 360 and 5.43%, respectively.
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