Forint Weakens as Orban Calls for Rate Cuts Ahead of Elections

The Hungarian forint weakened to around 331.6 per dollar, its lowest level in about a month, after Economy Minister Márton Nagy renewed public pressure on the central bank to cut interest rates. In an interview, Nagy argued that tight monetary policy has pushed the forint to artificially strong levels and is no longer justified as inflation continues to slow. He said rate cuts would help support economic growth and ease pressure on the government budget, echoing the long-standing stance of Prime Minister Viktor Orbán’s administration. Although the central bank, under Governor Mihály Varga, has resisted political pressure and kept rates unchanged for over a year, it recently signaled openness to easing in 2026 if conditions allow. Nagy also criticized carry trades, which have boosted the forint by attracting short-term foreign capital seeking high yields, arguing such flows are unstable and do not reflect long-term confidence in the economy.

Hungary’s forint fell more than 1% to 336 per US dollar on Tuesday, its largest single-day decline since late August, after Prime Minister Viktor Orban’s government stepped up pressure on the central bank to lower interest rates in an effort to boost the struggling economy ahead of elections in six months. Orban said on Monday that the country’s key rate of 6.5% — tied with Romania for the highest in the EU — was “higher than it could be.” Economy Minister Marton Nagy echoed the sentiment on Tuesday, noting that borrowing costs remain too high and that the central bank could still meet its inflation target with a lower rate. Orban, who has been in power since 2010, faces a critical test as Hungary heads toward April elections amid a cost-of-living crisis and sluggish economic growth.