Bad news for the forint – Commerzbank

At the moment there are not so many arguments in favor of the forint. Growth was disappointing in the second quarter, while at the same time the cut cycle stalled at 6.75% after inflation surprisingly rose to above 4% in July. Core inflation also edged back to 4.7% and is the worst performer of Q3, notes Commerzbank FX analyst Antje Praefcke.

The Forint is likely to remain under pressure

“Inflation is likely to have eased slightly again in August, as data due today should show. But work remains a challenge for the central bank (MNB). According to reports, there is a risk to an expansionary fiscal policy, as President Victor Orban could apparently change his budget consolidation plans to put together large spending packages in the run-up to the 2026 elections.”

“According to the Ministry of Finance, the budget deficit, which had increased to 7.6% of GDP during the pandemic, was planned to decrease to 2.9% in 2026. The new draft budget will be presented in November and could call into question these plans. “

“The cat does not like such prospects at all. After all, Hungary’s already low rating could be at risk if the promised fiscal consolidation falls by the wayside ahead of the 2026 elections. Therefore, the EUR/HUF mug could return to 400 if the data and news remain gloomy .”