“It is noted that the Hungarian central bank probably overdid it with easing rates.”, — write: www.unian.ua
It is noted that the Hungarian central bank probably overdid it with easing rates.
Trump’s presidency poses a threat to Hungary’s economy / photo ua.depositphotos.comDonald Trump’s victory may be a political boon for Hungarian leader Viktor Orbán, but economically it’s bad news for Budapest. The new US president increases inflationary risks.Reuters writes that while the forint was already on the back burner after the Hungarian central bank’s last rate cut in September, Trump’s stunning victory sent Central Europe’s worst-performing currency down to 2022 levels as the bank began an emergency rate hike.
Some strategists and fund managers say this could be just the prelude to a more serious fall if Trump follows through on his campaign promises to raise tariffs on China and Europe.
“Trump’s election victory adds new risks for Hungary,” said Roger Mark, an analyst at the management company Ninety One.
At the same time, he added that the dynamics of the forint after the US elections was “much better than expected”, despite the initial drop.
According to Societe Generale strategist Marek Drimal, despite the fact that Hungary still has the EU’s highest base rate of 6.5%, the country’s central bank has probably gone too far with easing rates.
Faced with a weak economy, Orbán’s government has repeatedly put pressure on the central bank to cut rates sharply as it prepares for elections in 2026.
Finance Minister Mihaly Varga, who is expected to succeed Orbán critic György Matolci as head of the bank, said inflation should be the bank’s top priority, but that it should also “cooperate” with the government on economic policy.
Some investors fear that the majority of politicians who support Orbán could lead to a sharper rate cut to stimulate growth ahead of the election, which would hit the forint and stoke inflation, which last year exceeded the highest level in the EU at more than 25%.
“The next leader will have to choose between strengthening the credibility of the central bank and its independence by focusing on its main goal – achieving price stability – and giving in to growing political pressure to support economic growth,” said Viktor Szabo, managing director of the abrdn fund.
The US presidential election – Viktor Orban’s statementsThe Prime Minister of Hungary, Viktor Orbán, said that due to the victory of Donald Trump in the elections in the USA, the European Union should develop a new strategy for actions towards Ukraine. According to him, such an election result puts on the agenda the question of Europe’s ability to independently continue military and financial aid to Ukraine.
After a phone conversation with the new US president, Orbán announced “big plans for the future”.
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