Hungary’s Central Bank Is Caught Between Inflation and Growth

ING expects the National Bank of Hungary to leave rates unchanged at 6.25% for now, but sees growing tension between geopolitical inflation risks and mounting pressure for eventual easing. 

• Rising energy insecurity linked to the Middle East, combined with fiscal stimulus and stronger domestic consumption, continues to keep inflation risks elevated.
• At the same time, improving market confidence, declining bond yields, and renewed euro-adoption optimism are creating conditions for potential rate cuts later this year.
• ING now sees two possible paths: rates staying unchanged through 2026, or a more dovish scenario involving cuts beginning as early as June.
• The strengthening forint increasingly creates its own policy dilemma, as policymakers balance currency strength against export competitiveness and financing conditions.

The report captures a broader Central European problem: inflation may be slowing statistically while geopolitical fragmentation keeps the real economy structurally inflationary.