Hungarian Forint: Policy contradiction weighs on HUF – Commerzbank

FXStreetOct 8, 2026 7:48 AM

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Commerzbank’s Tatha Ghose highlights that Hungary’s MNB minutes confirm a unanimous decision to halt rate cuts, yet offer no discussion of future hikes or cuts. Despite higher medium-term inflation forecasts and a lower target, the bank gives no signal of tightening. Ghose argues the Forint will remain weak until MNB adopts a much more hawkish stance and resolves its policy contradiction.

MNB stance seen as insufficiently hawkish

"Hungary's National Bank (MNB) published minutes confirming that the decision to stop rate cuts was unanimous at the September meeting. There was no discussion of rate cut or rate hike. Policymakers took comfort from (apparently) low inflation – ‘apparent’ because only the year-on-year measure is low – but stressed risks from higher and volatile energy prices, prospective wage settlements and the medium-term inflation outlook."

"September CPI inflation accelerated slightly to 1.6%y/y, driven by fuel prices, but this year-on-year number is wholly misleading. Month-on-month CPI indicators, including the rate of change of MNB’s underlying core measures, are re-accelerating from disinflation territory back towards target after having turned disinflationary. This reversal deserves attention."

"MNB recently raised its inflation forecast for 2027 sharply to 3.1%, while also reducing its medium-term inflation target from 3.0% to 2.5%, effective from January 2028. Lowering the target lowers tolerance for inflation overshoots too. Yet MNB still gives no signal towards a possible need to hike rates, even while sentiment has turned in this direction in most other countries."

"MNB is using euro adoption and ERM II talk almost like a verbal intervention tool to reassure markets that deeper reforms are on the way. This will not suffice. The forint is still weak and will not recover until MNB has shifted to a much more hawkish stance."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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