May inflation at 1.8% year-on-year reinforces expectations for a National Bank of Hungary easing cycle starting in June.
The Hungarian forint remained stable against the euro as markets priced in an imminent easing cycle by the National Bank of Hungary. May inflation slowed to 1.8% year-on-year, well below expectations, solidifying the case for monetary policy loosening.
Analysts anticipate the NBH will begin cutting rates in June, with an initial 25 basis point reduction to 6.00%. A total of 75 basis points in cuts is expected for the cycle, reflecting Hungary’s distinct disinflation trajectory compared to the broader European region.
The forint’s resilience suggests investors have already factored in the anticipated policy shift, with no immediate volatility observed following the inflation data release.