ING’s Frantisek Taborsky anticipates that the National Bank of Hungary (NBH) will cut its policy rate by 25 basis points to 5.75%, continuing its easing cycle despite recent pressures on the Hungarian Forint (HUF) and local rates [1]. The NBH restarted its easing cycle in June and has committed to further rate cuts in July and August, with a new forecast expected in September when the central bank will reassess its next steps [1].
The Hungarian Forint has experienced significant global pressure, resulting in the largest sell-off since the April general elections. However, Taborsky argues that this sell-off is more reflective of market positioning than of deteriorating fundamentals, which he describes as remaining constructive [1]. He notes that June inflation came in below the NBH’s forecast, and the central bank governor recently described the EUR/HUF exchange rate around 355-360 as stable [1].
Market participants have already priced in more than 75 basis points of easing, including the anticipated cut, with expectations for a terminal rate between 4.75% and 5.00% [1]. Taborsky forecasts the policy rate to reach 5.00% by the end of this year and 4.00% by 2028, suggesting room for the market to adopt a more dovish stance and for investors to rebuild long positions in the forint, depending on the global environment [1].
Despite recent underperformance of HUF assets compared to both Central and Eastern European peers and broader emerging markets, Taborsky maintains that the situation appears more stable from the central bank’s perspective and expects the sell-off to fade with any signs of global relief [1].
CONCLUSION
The National Bank of Hungary is expected to continue its rate-cutting cycle, with ING projecting a 25bp cut to 5.75% and further easing ahead. While the forint has faced notable pressure, ING sees this as a result of market positioning rather than weakening fundamentals, and anticipates a return to a more dovish market stance if global conditions improve.