National Bank of Hungary Shifts to Hawkish Stance Amid Geopolitical Tensions

Key Facts

1The easing cycle in Hungary ended almost immediately after the first rate cut in 16 months.

2Geopolitical tensions in the Middle East forced the central bank to revise macro projections towards a more hawkish stance.

3ING analysts believe there is still a chance for a rate cut later in 2026 despite the current hawkish shift.

The National Bank of Hungary (NBH) has effectively paused its monetary easing cycle shortly after its commencement, signaling a significant shift in policy direction. This pivot comes after only one interest rate cut in 16 months, reflecting a more cautious approach by the central bank. According to analysts at ING, escalating geopolitical tensions in the Middle East have forced a revision of macroeconomic projections toward a more hawkish stance. The bank aims to maintain stability in the face of external pressures that could impact inflation and currency performance. While the immediate outlook remains restrictive, ING suggests that there is still a possibility for further rate cuts, though likely not until 2026. This hawkish turn is expected to provide support for the Hungarian Forint against major currencies like the EUR and USD.