National Bank of Hungary Pauses Rate Cuts, Lowers Long-Term Inflation Target

• NBH paused rate cuts, keeping base rate at 5.50%.
• Lowered long-term inflation target to 2.5% from 2028.
• Decision seen as supportive for HUF, but global factors constrain.

The National Bank of Hungary (NBH) paused its interest rate cutting cycle, maintaining the base rate at 5.50% after three consecutive reductions. This decision was accompanied by a significant adjustment to its long-term inflation target, lowering it to 2.5% from 2028, a move seen as aligning with a potential pivot towards euro adoption. While the NBH Governor’s remarks were perceived as hawkish, some analysts suggest the easing cycle may not be entirely concluded. The central bank’s stance is viewed as broadly supportive for the Hungarian Forint (HUF). However, the Forint’s outlook remains subject to broader market dynamics, including U.S. Dollar strength and global energy price movements.