(Bloomberg) -- Hungary is poised to keep interest rates unchanged after the central bank signaled monetary easing would likely remain on hold following a plunge in the forint.
The National Bank of Hungary will keep its benchmark interest rate at 6.5% on Tuesday, according to all 22 economists in a Bloomberg survey. The decision will be announced at 2 p.m. in Budapest, followed by a statement and a briefing an hour later.
The European Union nation resumed easing last month, cutting the key rate by a quarter-point to 6.5%, still tied with Romania for the highest benchmark in the bloc. The move followed an easing cycle spanning more than a year, with only a brief pause in August.
A slide in the national currency prompted Deputy Governor Barnabas Virag to take a more hawkish tone last week, saying the rate may be maintained for a “sustained period” as headwinds from geopolitics and changed US rate expectations limit Hungary’s monetary-easing room.
A forecast uptick in inflation in the rest of this year, as well as the fallout from recent steps announced by Prime Minister Viktor Orban’s administration to stimulate sluggish economic growth in the run-up to elections in 2026, have also complicated the central bank’s job.
“Clearly, a rate cut is not on the table,” Frantisek Taborsky, an ING Groep NV analyst, said in a note Monday. “The main question is how long the pause in the cutting cycle will be. We expect another rate cut in December – however, the market is moving in a hawkish direction further out.”
The forint, which fell to an 18-month low against the euro this month, has weakened by more than 1% so far in October. Since Virag’s latest comments, money market traders have all but priced out rate cuts this year, based on forward rate agreements.
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