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Hungarian central bank expected to cut base rate to 5.75%
Commerzbank expects the Magyar Nemzeti Bank’s 25bp cut to be supported by lower CPI forecasts, even as geopolitical and risk-off moves have pressured the forint.
FXStreet reports Commerzbank expects Hungary’s central bank, the Magyar Nemzeti Bank (MNB), to cut its base rate by 25 basis points to 5.75%, continuing the easing cycle that began in June.
According to Commerzbank’s Tatha Ghose, the rate decision is justified by lower CPI forecasts and by Governor Mihaly Varga’s view that inflation will remain below the 3% target through the rest of this year and into 2027.
Commerzbank also notes that global risk aversion and geopolitical tensions have weakened the forint, but says a widely anticipated, already signaled move should have limited FX impact today.
The note adds that while there was a dissent vote in June for a 50bp cut, the Monetary Policy Committee is likely to stay cautious due to uncertainty around fiscal policy, the Iran ceasefire situation, and higher energy prices.