National Bank of Hungary Preview: As Summer Arrives, the Situation Heats Up

ING expects the NBH to hold the base rate at 6.25% in May but identifies a possible 25bp cut in June if market conditions stabilize. Geopolitical risks and fiscal stimulus provide hawkish pressure, while forint strength and euro adoption goals suggest a dovish turn.

Key Takeaways

• 1.The National Bank of Hungary is expected to maintain the base rate at 6.25% during the May 26 meeting.
• 2.The June meeting is considered pivotal, with a potential 25bp rate cut scenario if risks ease and the NBH reinstates a 'live' meeting approach.
• 3.Inflationary risks are rising due to Middle East geopolitical uncertainty and domestic fiscal stimulus, potentially offset by a strengthening forint.

Table of Contents

• Offsetting developments keep base rate at bay in May
• The central bank could reinstall the 'live' approach
• Our market views
• Hungarian yield curve

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