Hungary's forint gains amid signs its central bank may pause easing and revise its inflation goal
The Hungarian forint gained after a report said the central bank MNB may pause its easing cycle at the 22 September meeting and revise its inflation target to 2.5 per cent from 3 per cent. Commerzbank's Tatha Ghose tied the report to the MNB's cautious August tone, when it trimmed its base rate to 5.5 per cent without committing to further easing. Portfolio reported that the MNB said only that the rate path would follow September's Inflation Report, without acknowledging a pause.
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A report on a possible pause moves the forint
TradingPedia reported that the Hungarian forint gained after a report said the National Bank of Hungary, known as the MNB, might pause its easing cycle at its 22 September policy meeting and is weighing a revision to its inflation target. Commerzbank strategist Tatha Ghose said the reported shift would be consistent with the central bank's more cautious tone in August, when it trimmed its base rate by 25 basis points to 5.5 per cent without committing to further easing. Ghose noted that July's headline inflation stood at 1.2 per cent year on year, which he said gives policymakers room to revise the inflation target, even though seasonally adjusted month-on-month inflation has accelerated to a pace above 3.5 per cent. He said a pause paired with a revised target would likely help the forint by addressing inflation risks directly.[2]
The MNB's own response stops short of confirming
Portfolio reported that the MNB, responding to the pause report, said only that its review of the inflation target, which the same report said could fall from 3 per cent to 2.5 per cent, is under way and that the public will be informed of the result in the autumn. The central bank did not confirm a pause, Portfolio said, so the account of a pause rests on the report rather than on a decision the MNB has published. The MNB's base rate stands at 5.5 per cent after a third consecutive cut of 25 basis points in August.[1]
An unconfirmed report, a rallying currency
The two accounts describe opposite ends of the same episode: TradingPedia reported that the forint's gain followed the pause-and-revised-target report and Commerzbank's reading of it, while Portfolio's account of the MNB's own statement shows the central bank acknowledging only that its inflation-target review is under way, not the pause itself. Both point to the same 5.5 per cent base rate set after August's move and the same 22 September meeting as the date markets are now watching, and Ghose separately noted that government fiscal plans remain a distinct, unresolved backdrop to the decision.[1], [2]
