The National Bank of Hungary (NBH) maintained its base rate at 6.25%, aligning with market expectations, but signaled a dovish shift in its monetary policy stance, according to ING’s Frantisek Taborsky [1]. The central bank's decision confirmed market pricing for a rate cut in June, with the market now anticipating a terminal rate near 5.25%, implying approximately 100 basis points of easing from the current level [1].
Taborsky expects a 25 basis point cut in June, with the possibility of one or two additional cuts later in the year, contingent on a persistent easing of risks, stabilization of the forint, and favorable yield levels [1]. Despite the anticipated rate cuts, ING maintains a constructive outlook on the Hungarian forint, forecasting the EUR/HUF exchange rate to reach 350 by mid-year [1].
The NBH's openness to gradual easing has reinforced market confidence in further rate reductions, and the current market pricing reflects this expectation [1]. The central bank's stance is seen as supportive of the forint, provided that macroeconomic risks continue to diminish and financial conditions remain stable [1].
CONCLUSION
The National Bank of Hungary's dovish signals have solidified market expectations for a June rate cut and further easing this year. Despite the anticipated rate reductions, ING remains positive on the forint, projecting a stable outlook for the currency in the coming months.