Hungary Slashes Inflation Target to 2.5% in Euro Adoption Push

Hungary's National Bank has made a significant move towards adopting the euro as its currency. The bank will lower its inflation target from 3% to 2.5%, effective from 2028, in an effort to align with European Union standards.

The decision was announced by Governor Mihaly Varga on Tuesday, following a pause in interest rate cutting cycle and the maintenance of the key rate at 5.5%. This adjustment is seen as a crucial step towards euro adoption, which Hungary has been considering for some time.

The bank will retain a 1 percentage point tolerance band around its CPI goal, ensuring that there is flexibility in managing inflation within the new target range.