Hungary's Central Bank Hints at Rate Cut if Euro Progress Continues

Hungary's central bank has hinted at a possible rate cut in 2024 if the country makes progress on its plan to adopt the euro. Deputy Governor Zoltan Kurali said that a credible fiscal plan and favorable external market conditions could lead to a rate cut by the end of this year.

The National Bank of Hungary left its base rate steady at 5.5% recently, pausing a series of interest-rate cuts. However, if inflation stays subdued and external risks abate, further easing is possible.

Kurali emphasized that meeting euro entry criteria by around 2030 is crucial for monetary policy decisions. Hungary could adopt the euro by January 1, 2032, if it meets the Maastricht criteria by 2030 and joins ERM-2 by 2029.