Hungarian Forint: Cautious MNB stance supports HUF – Commerzbank
Commerzbank’s Antje Praefcke reviews the Hungarian Central Bank decision to keep the key rate at 5.50% while lowering its medium-term inflation target to 2.5% from 2028. The MNB slightly raised its 2027 inflation forecast and will move to eight policy meetings per year.
Commerzbank's Antje Praefcke discussed the Hungarian Central Bank's decision to maintain the key rate at 5.50% while reducing its medium-term inflation target to 2.5% from 2028. Praefcke viewed the cautious, data-driven stance of the MNB as generally supportive for the Forint, barring any renewed rate cuts. The bank slightly raised its 2027 inflation forecast and will hold eight policy meetings per year starting in 2027.
Despite the inflation risks due to drought and energy prices, the MNB plans to base its interest rate decisions on the inflation outlook, global developments, and Hungary's risk premium. Central Bank Governor Mihaly Varga confirmed that the Council could choose to keep rates steady or cut them. The MNB's technical changes will take effect in 2027 and 2028.
Overall, the MNB's monetary policy is supportive for the Forint, assuming the interest rate cycle remains unchanged in the foreseeable future.
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