Mr. Nagy speaks as well: the policy story continues

HUNGARY - In Brief 07 Oct 2025 by Istvan Racz

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We apologise for coming back the second time within a single day. But as it happens, Mr. Nagy, the economy minister, appearing at the Budapest Economic Forum this morning, picked up the policy topic already touched upon by PM Orbán yesterday, and it seems that the two sets of comments need to be looked at together. So, as we have just reported, Mr. Orbán gave a well-hedged, rather generalistic response to questions on his preferences regarding the forint exchange rate and the MNB's interest rate policy. But his economy minister spoke much more specifically than that. Mr. Nagy said that the MNB base rate is just too high, leading to a carry that is highest within the region. It is not that the positive real interest rate should be eliminated, but it could be less than it is currently, so that financial stability, including the stability of the forint could be still preserved. and the MNB's inflation target could still be achieved. He said the domestic and the external environments both may justify some reduction of the base rate, referring here to the ongoing interest rate reduction by various central banks around the globe and within the CEE region. For sure, it is not that surprising that Mr. Nagy, who is responsible for the economy and the government budget at the same time, would like to see lower MNB interest rates. The novelty is that so far he has not made comments like this, apparently because everyone, including him, wanted a stronger forint. Now, it appears that the government see EURHUF 390 about to be the top end for the forint's desirable upside for now, and they think that with attempts by the HUF to break below that line, it is time to contain it by some ...