The Magyar Nemzeti Bank (MNB), Hungary's central bank, is anticipated to keep its policy rate unchanged at 6.25% during its first meeting following the recent elections, according to ING strategist Frantisek Taborsky [1]. The primary focus of the meeting is expected to be on updated forward guidance and any changes since the last meeting in March [1].
Despite market expectations for significant rate cuts—approximately 50 basis points over the next 18 months—Taborsky notes that the MNB is unlikely to move quickly in this direction. He highlights that Hungary is one of the few markets globally where such aggressive rate cut pricing exists, but believes the current market pricing already reflects the maximum possible cuts [1].
Taborsky sees the risks as skewed to the hawkish side for the upcoming meeting, which could provide support for the Hungarian forint (EUR/HUF), which has been trading in the 360–367 range since the elections [1]. The market has shifted to a more dovish stance post-elections, but ING expects the central bank to maintain a cautious approach [1].
CONCLUSION
Hungary's central bank is expected to keep rates steady at 6.25%, with ING highlighting hawkish risks despite market expectations for cuts. This stance may support the forint within its recent trading range. Investors are likely to focus on any changes in forward guidance from the MNB.