The National Bank of Hungary is expected to maintain the base rate at 6.50%, with no signs of change since the 12th consecutive hold. The bank’s last meeting on September 23 left the base rate unchanged, as inflation is predicted to remain above the central bank’s tolerance band of 3% +/-1%.
The swaps market anticipates 75bps of cuts in the next two years, yet Hungary’s positive real interest rates, a lax 2026 fiscal stance, and a current account surplus of 1.9% of GDP in Q2 support a stronger Hungarian Forint (HUF).
Market Observations and Analysis
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We see the National Bank of Hungary holding its base rate at 6.50% today, continuing a year-long pause that began back in September 2024. With the latest inflation data for September 2025 coming in at 5.1%, the positive real yield of 1.4% continues to be a major draw for the forint. This stability from the central bank suggests a predictable policy environment for the near term.
Given Hungary’s fundamentals, including a current account surplus that official statistics showed widened to 2.1% of GDP in the third quarter of 2025, we favor a stronger forint. This environment is very different from the high inflation and volatility we observed back in 2022 and 2023, offering a clearer carry trade opportunity. We believe derivative traders should consider shorting EUR/HUF, anticipating the pair will fall from its current levels around 390 as the forint appreciates.
Trading Strategies and Market Outlook
While the swaps market is pricing in rate cuts over the next two years, the immediate path for the NBH is to hold firm, making this a solid trade for the coming weeks. Traders could use short-dated put options on EUR/HUF to capitalize on this view with defined risk. This strategy appears more robust than a play against the dollar, given the broad USD recovery we have been tracking, which saw the Dollar Index (DXY) break above 107.50 last week for the first time since early 2024.
