{
  "type": "article",
  "title": "Societe Generale Says Hungarian Forint Strength Gives MNB Room to Cut Rates Further Toward 5.0 Percent",
  "summary": "Hungary's forint has touched its strongest level against the euro since August 2021, with inflation easing to 1.8% below the MNB's target band. Societe Generale expects the central bank to cut rates to 5.0% by year-end as political and fiscal conditions continue to support the currency.",
  "content": "Hungary's central bank, the Magyar Nemzeti Bank (MNB), is set to lower its benchmark interest rate by 25 basis points today, bringing it to 6.0%, a move fully in line with market consensus. Analysts at Societe Generale view this cut as the opening chapter of a longer easing cycle, underpinned by a strengthening forint, benign inflation and a notably improved political backdrop that together point to the MNB rate reaching 5.0% by year-end.\n\nForint at Its Strongest Level Since August 2021\nThe EUR/HUF exchange rate has retreated to around 350, a level not seen since August 2021, reflecting a meaningful shift in confidence toward Hungary's currency. This appreciation is rooted in concrete policy changes rather than momentum alone. Hungary's government has adopted a euro-friendly fiscal stance, made visible progress on unlocking European Union funds and demonstrated credible commitment to budgetary discipline, all of which have helped rebuild foreign investor confidence.\n\nThe impact on funding conditions has been substantial. Hungary's 10-year government bond yields have fallen sharply from 7.47% in March to approximately 5.15%, now actually lower than Poland's equivalent yield of 5.41%. Swap rates have also come down to 4.81%, reflecting the broad improvement in Hungary's market standing.\n\nInflation Below Target Reinforces the Easing Case\nHungary's headline inflation slowed to 1.8% in May, dropping below the MNB's 2-4% target band. This undershoot removes a key constraint on further rate reductions and strengthens Societe Generale's base case that the MNB rate will fall to 5.0% by the end of the year.\n\nDespite this anticipated easing, Hungary retains an attractive carry advantage over its regional peers. Both the Czech Republic and Poland currently operate with policy rates at 3.75%, meaning even as Hungary continues to cut, the forint should preserve enough yield appeal to keep interest from carry-focused investors intact.\n\nPeter Magyar's Election Victory Shifted the Investment Climate\nPolitical developments have played a significant role in the forint's recovery. The election victory of Peter Magyar in April triggered a noticeable improvement in investor sentiment toward Hungary, compressing the risk premium on Hungarian assets and giving the MNB greater latitude to pursue its easing cycle without worrying about destabilising capital outflows.\n\nTechnical Picture Points to Near-Term Caution\nWhile the medium-term outlook for the forint looks constructive, Societe Generale's analysts caution that tactical profit-taking in the currency is likely given how stretched current positioning has become. EUR/HUF has recently touched the lower boundary of a descending channel in place since 2022, sitting at 348, a level that also functions as a key technical projection point and may provide intermittent support.\n\nA brief bounce in EUR/HUF is already forming. The critical test ahead is whether the pair can use this bounce to build a durable base and gradually recover toward the 50-day moving average, currently positioned around 358. If EUR/HUF fails to sustain a hold above 348, Societe Generale's analysis suggests the decline could extend toward the 2021 lows in the 344 to 342 range.\n\nWhat this means for you\n• For forex traders and investors: Hungary's forint is trading at multi-year highs and could strengthen further if the MNB follows through with cuts toward 5.0% by year-end, but stretched positioning makes a short-term bounce in EUR/HUF likely before any further forint gains materialise.\n\nQuestions & Answers\n\n1. How much is the MNB expected to cut rates today?\nThe MNB is expected to lower its benchmark rate by 25 basis points, bringing it to 6.0%, in line with market consensus.\n\n2. What level is EUR/HUF currently trading at?\nEUR/HUF has pulled back to around 350, its lowest level since August 2021.\n\n3. What is Hungary's current inflation rate?\nHungary's headline inflation slowed to 1.8% in May, which falls below the MNB's 2-4% target band.\n\n4. What is Societe Generale's year-end forecast for the MNB rate?\nSociete Generale's base case is for the MNB rate to fall to 5.0% by year-end.\n\n5. How do Hungary's rates compare to regional peers?\nBoth the Czech Republic and Poland currently have policy rates at 3.75%, well below Hungary's 6.0%, giving the forint a notable carry advantage.\n\n6. What has happened to Hungary's 10-year bond yields?\nHungary's 10-year bond yields have fallen from 7.47% in March to approximately 5.15%, now lower than Poland's equivalent at 5.41%.\n\n7. What role did Peter Magyar's election win play in the forint's recovery?\nHis election victory in April improved investor sentiment toward Hungary, reducing the risk premium on Hungarian assets and giving the MNB more room to ease policy.\n\n8. What are the key technical levels to watch for EUR/HUF?\nThe key support is at 348, the lower limit of a descending channel since 2022. If that breaks, the 2021 lows at 344-342 come into play. The 50-day moving average currently sits around 358.",
  "url": "https://trendkia.com/en/market/hungary-forint-ki-majabuti-se-mnb-ko-mili-byaja-dara-ghatane-ki-gunjaisha-societe-generale-ka-anumana-2457",
  "category": "Market",
  "publishedAt": "2026-06-23",
  "tags": [
    "Hungarian Forint",
    "EUR/HUF",
    "MNB interest rate",
    "Societe Generale",
    "Hungary economy",
    "forex market",
    "European bond yields",
    "inflation"
  ],
  "language": "en",
  "site": "TrendKia"
}