Commerzbank analyst Tatha Ghose expects Hungary\u2019s central bank (MNB) to cut its base rate by 25 basis points at today\u2019s meeting. Market expectations are split between no change and a 25 basis point cut, while recent guidance from Governor Varga has been mixed.<\/p>\n
The outlook is linked to softer inflation data, including Hungary\u2019s January headline inflation of 2.1% year on year. Seasonally adjusted month-on-month core inflation measures were reported as moving towards the central bank\u2019s target.<\/p>\n
Disinflationary Harmonised Index of Consumer Prices (HICP) trends across the EU are also cited as supporting an easing decision. A rate cut is described as consistent with improved inflation conditions.<\/p>\n
The forint could see short-term volatility after a move towards lower rates. The assessment presented is that a cut following lower inflation does not automatically reduce the real interest rate.<\/p>\n
The article notes it was produced with an Artificial Intelligence tool and reviewed by an editor. It is attributed to the FXStreet Insights Team.<\/p>\n
With the Hungarian National Bank (MNB) decision due later today, we expect a 25 basis point rate cut. Recent data from the Hungarian Central Statistical Office showed January 2026 inflation easing to 3.1%, supporting the case for this move. Broader disinflationary trends, with the latest Eurostat flash estimate showing Eurozone HICP at 1.9%, give the MNB further cover to ease policy.<\/p>\n
Given the mixed guidance from officials, traders should consider positioning for increased volatility in the forint. A short-term options strategy, such as a straddle on the EUR\/HUF pair, could be effective to capitalize on a sharp price move regardless of the outcome. The uncertainty around the decision makes a simple directional bet risky.<\/p>\n
Looking back, we saw a long cycle of rate cuts through 2024 and 2025, which gradually eroded the forint’s yield advantage. Another cut today would confirm this trend, further diminishing the appeal of the HUF carry trade that was popular in previous years. This suggests unwinding any remaining long forint positions funded by lower-yielding currencies.<\/p>\n
While a rate cut is dovish, we do not believe it will lead to a lasting negative impact on the currency. The move is justified by fundamentals, which should ultimately support the forint after some initial choppiness. Traders should therefore look for opportunities to enter long HUF positions if an initial sell-off seems overdone.<\/p>\n
Overnight index swaps are currently pricing in a roughly 75% probability of a 25 basis point cut. This means the bigger market reaction would likely come from a surprise decision to hold rates steady. Such a move would be seen as hawkish and could trigger a sharp, albeit perhaps temporary, rally in the forint.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Commerzbank expects Hungary\u2019s central bank to cut rates 25bp amid softer inflation; forint may briefly fluctuate.<\/p>\n","protected":false},"author":62,"featured_media":17026,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42687","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=42687"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42687\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17026"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=42687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=42687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=42687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}