Hungary could join the ERM II exchange rate mechanism relatively quickly, central bank governor Mihály Varga said at a press conference on Tuesday, but the decision rests with the government. Varga said further preparatory work is still needed before the euro can be introduced, and that the choice must be made at the government’s table.
The central bank kept its base rate unchanged, ending a three-month summer easing cycle that paused in September. Varga said caution in monetary policy remains warranted despite basically positive domestic processes, and that the central bank keeps its policy data-driven.
Inflation outlook and the new target
Varga said inflation may rise somewhat in the coming months, after largely reflecting the strength of the forint in spring. The new inflation target of 2.5 percent takes effect from 2028. Global inflation remains high, and higher commodity prices could feed into consumer prices if the process persists.
Long yields in developed economies are near a two-decade high, Varga said. That backdrop shapes how carefully the central bank intends to move.
Fiscal path and rate expectations
The Fiscal Council has not yet received the draft 2027 budget, Varga said. The government has presented a fiscal path running to 2030. A possible rate cut in November or December remains on the table if international sentiment improves.
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