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Hungary cuts policy rate as euro entry narrative supports assets

ING analysts link the forint’s outlook to a potential shift in Hungary’s inflation target to 2.0% from 3.0%, alongside forecasts of EUR/HUF ending at 350 and the 10-year yield at 4.75%.

Reported · Written up by our desk · EM Currencies

Hungary’s central bank cut its policy rate by 25 basis points to 5.50%, according to ING’s Chris Turner, citing Chief Economist Peter Virovacz’s view that the terminal rate will reach 4.75%.

Virovacz said the euro entry narrative could provide broad support for Hungarian assets, including a future reorientation of Hungary’s inflation target to 2.0% from 3.0%.

In its outlook, ING forecast year-end EUR/HUF at 350 and a 10-year yield of 4.75%, while noting the central bank provided limited forward guidance with the decision.

FXStreet’s market wrap also highlighted euro and US dollar moves, with investors watching the US PCE inflation data and additional commentary as potential catalysts for FX sentiment.

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