Hungarian Forint: Inflation surprise and HUF dynamics – ING
ING’s Frantisek Taborsky highlights that Hungarian inflation rebounded to 1.3% in August but stayed below expectations and the NBH’s forecast, with price growth seen remaining under target this year.
Hungarian inflation unexpectedly rose to 1.3% in August, falling short of market expectations but still below the National Bank of Hungary's forecast. The central bank had anticipated a 1.8% reading, indicating a 0.5 percentage point miss compared to July's 0.7 percentage point shortfall. Despite the rebound, experts expect inflation to remain below the central bank's target for the remainder of the year.
The NBH is considering pausing rate cuts in September to align with a potentially lower inflation target prior to Euro adoption. Market sentiment is now focused on the possibility of EUR/HUF moving above 364, should rising energy prices weaken the forint's strength. However, the downward trend of EUR/HUF below 364 may rebound if energy prices persist in increasing, as the forint's behavior appears to have returned to its previous high-beta pattern.
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