Societe Generale analysts anticipate that the Hungarian central bank, Magyar Nemzeti Bank (MNB), will cut its policy rate by 25 basis points to 6.0%, aligning with market consensus. This expectation is underpinned by improved investor sentiment following Peter Magyar’s election victory in April and the adoption of a more EU-friendly policy stance, which has contributed to stronger funding conditions and a notable appreciation of the Hungarian Forint (HUF) [1].
The EUR/HUF exchange rate has retraced to around 350, marking its lowest level since August 2021. This appreciation is supported by headline inflation slowing to 1.8% in May, which is below the MNB’s 2–4% target band, further reinforcing the case for monetary easing. Societe Generale’s base case projects the MNB rate to fall to 5.0% by the end of the year [1].
The forint’s strength is also attributed to the unlocking of EU funds and commitments to fiscal discipline, which have bolstered market confidence. Funding conditions have improved significantly, with 10-year yields dropping to approximately 5.15% from 7.47% in March, now below Poland’s 5.41%. Swap rates have also declined to 4.81% [1].
From a technical perspective, EUR/HUF has reached the lower limit of a descending channel at 348, which may act as intermittent support. While a brief bounce is occurring, analysts note the importance of whether the pair can form a base and reclaim the 50-day moving average around 358. Failure to maintain above 348 could lead to further declines toward the 2021 lows of 344/342 [1].
CONCLUSION
The Hungarian Forint’s recent strength, supported by improved sentiment and favorable policy developments, has paved the way for further monetary easing by the MNB. Analysts expect a 25 basis point rate cut, with potential for additional reductions by year-end, as inflation remains subdued and funding conditions improve. Market participants are closely watching technical levels for further direction in the EUR/HUF exchange rate.