Budapest – The National Bank of Hungary (NBH) indicated that a continued rise in the forint is a core element of its strategy to achieve a revised consumer‑price inflation target that sits 0.5 percentage point above the European Central Bank’s goal. The central bank said that nominal foreign‑exchange gains can offset the persistently high services‑inflation gap with the euro area, which stems from strong wage convergence.
NBH highlighted that over the past decade the forint’s real exchange rate has lagged behind that of its Central and Eastern European peers. Its analysis concluded that forint strength is more beneficial for disinflation than it is detrimental to economic growth, and it found no identifiable long‑term relationship between nominal appreciation and export performance across the European Union.
The bank’s inflation target, set 0.5 percentage point higher than the ECB’s, is intended to allow price‑level convergence with the euro area while avoiding an "excessive burden" on the real economy that rapid nominal appreciation could create.
Wage growth in Hungary is currently running at 7‑8% year‑over‑year and is expected to normalize toward productivity‑linked levels. The upcoming government will need to decide on a proposed 14% increase in the minimum wage slated for 2027, a plan put forward by the ruling Fidesz party that could be revised if growth or inflation diverge from forecasts.
