Hungary: Low inflation opens path for rate cuts – ING

💡 DMK Insight

Hungary’s inflation drop to 2.1% is a game changer for traders: This significant dip below the National Bank of Hungary’s 3% target could lead to a shift in monetary policy. With core inflation also falling, the central bank might consider easing interest rates sooner than expected, which could impact the Forint’s strength. A stronger Forint generally means lower import costs, benefiting sectors reliant on foreign goods. Traders should monitor the Forint closely, as any signs of rate cuts could lead to volatility in forex pairs involving the Forint, particularly against the Euro and Dollar. But here’s the flip side: while lower inflation is good news, it could also signal weaker consumer demand, which might dampen growth prospects. If the central bank prioritizes growth over inflation control, it could lead to a weaker currency in the long run. Keep an eye on upcoming economic indicators and central bank statements for clues on their next moves. Watch for any shifts in the Forint’s trading range, especially if it approaches key support or resistance levels against major currencies.