There is currently little evidence in the forint’s favour. Growth was disappointing in the second quarter, while at the same time the cuts cycle stalled at 6.75% after inflation unexpectedly rose above 4% in July. Core inflation also rose back to 4.7%, the worst among the CE3, notes Commerzbank currency analyst Antje Praefcke.

The forint will likely remain under pressure

“Inflation is likely to have fallen slightly again in August, as data due out today should show. However, the task of the central bank (MNB) remains difficult. There are reports that there is a risk of expansionary fiscal policy, as President Viktor Orban may apparently change his budget consolidation plans to prepare large spending packages in the run-up to the 2026 elections.”

“According to the Ministry of Finance, the budget deficit, which rose to 7.6% of GDP during the pandemic, was expected to fall to 2.9% in 2026. A new draft budget will be presented in November and could render these plans moot.”

“The market doesn’t like this outlook at all. After all, Hungary’s already low rating could be at risk if the promised budget consolidation goes down the drain ahead of the 2026 elections. That’s why the Canadian EUR/HUF pair could return to around 400 if data and news remain gloomy.”