GS Fishman HUF thoughts into a critical MNB meeting

GS Fishman - HUF thoughts into a critical MNB meeting 21 Sep 2026 Karen Reichgott Fishman · Goldman Sachs · FX Research 21 Sep 2026

EUR/HUF price action has continued to be mostly driven by energy price shifts, with the move higher since early July largely matching our model’s predicted series, which is based on EUR/HUF’s sensitivity to global market variables, including oil and natural gas prices (first chart below).

However, central bank communication has also played an important role in HUF performance around this energy-led trend, and we think this could again be the case this week.

This week’s MNB meeting – at which our economists expect the central bank to pause its cutting cycle – could mark a significant milestone in Hungary’s Euro Area convergence path, with the announcement of a lower inflation target. Media reports citing an MNB official suggest the central bank is set to lower the target from 3.0% to 2.5% this Tuesday. We think the lowering of the inflation target is positive for HUF. This is because widening inflation differentials have been a key underlying driver of the upward trend in EUR/HUF spot and fair value (second chart below).

Apart from the target change, we will focus on the September Inflation Report and any changes to forward guidance, which currently states that the future path of rates will depend on this Inflation Report. The June Inflation Report projected inflation to average 1.8% in 2026 and 2.3% in 2027. Since then, oil and refined product prices have increased, but the June-August inflation prints all came in below the MNB’s forecasts. In our view, FX appreciation still looks to be driving most of the recent decline in inflation, which is consistent with Hungary’s high FX pass-through rate.

While we had previously argued that policymakers likely preferred a greater share of the Hungary premium reduction to be reflected in rates rather than in FX through the summer, recent policy signals have shown greater sensitivity to FX developments as HUF depreciated through late August. Given this, we will be watching for any signals in the press release and Governor Varga’s remarks regarding the MNB’s sensitivity to the Forint.

More broadly, we are entering a critical period in which local catalysts — including the inflation target revision, the Euro adoption plan, the 2027 budget, and the disbursement of EU funds through Q4 — will be in focus. In our view, these developments represent important tailwinds for the Forint. However, they will have to be balanced against the high energy price backdrop, and we think EUR/HUF is unlikely to decouple from global factors as strongly as it did in April, when energy prices were also falling. We think a mix of negative global developments and positive local developments may leave EUR/HUF relatively range-bound. We therefore continue to like pairing HUF longs with PLN shorts to insulate from shocks related to both energy prices and geopolitics.

If, instead, energy prices were to decline materially from here, we would expect HUF to outperform within EM. For example, based on our latest high-frequency betas of EUR/HUF to Brent oil and European natural gas prices, a 20% decline in both prices from current levels – which would take them to roughly $85/bbl and 65 EUR/MWh – would be associated with a 1.5% decline in EUR/HUF.

Charts of the Day. The rise in EUR/HUF since early July can be mostly explained by shifts in global market variables, including oil and natural gas prices.

The trend higher in EUR/HUF spot and fair value tracks closely the increase in relative prices between Hungary and the Euro Area.