Hungary kept its key borrowing cost unchanged at the latest meeting, but policymakers opened the door to a rate reduction in June, driving the forint lower as markets priced in monetary easing.
The Hungarian central bank held its key rate, but signaled a potential cut in June, citing easing inflation. This forward guidance is dovish and weighs on the forint. EUR/HUF rose on the announcement as markets priced in a higher probability of monetary easing.
The decision to hold but signal a June cut is bearish for the forint, as lower future interest rates reduce carry appeal.
If data continues to support a cut, EUR/HUF may rise further; but any hawkish surprises could reverse some losses.
Hungary's central bank left its benchmark rate unchanged, but signaled that easing could start in June amid slowing inflation. The forint edged lower on the announcement. Forward guidance suggested the bank is monitoring disinflation and may cut next month. The decision was widely expected, but the explicit mention of June as a possible start for cuts surprised markets slightly.
It held its key interest rate unchanged, keeping borrowing costs steady.
Inflation has been decelerating, and forward guidance from the bank suggested a cut could come next month.
The forint weakened, with EUR/HUF rising as investors priced in upcoming easing.