BUDAPEST: The forint was steady on Tuesday ahead of a meeting of the National Bank of Hungary at which it is expected to hold rates and revise its inflation forecasts, while the Polish zloty eased marginally with investors on the sidelines waiting for the Fed.
At 0721 GMT the Hungarian forint, which has weakened more than 6% this year versus the euro, traded flat at 408.65.
Analysts polled by Reuters expect NBH to keep its base rate at 6.5%, with the central bank holding a press conference after the decision at 1500 CET (1400 GMT).
“Due to the significant weakening of the forint exchange rate in the recent period and its expected inflationary impact, no rate cut is possible at the moment, and we expect the next rate cut to take place in the second quarter of next year,” brokerage Equilor said in a note.
They added the bank would likely revise its GDP projections down and CPI forecasts upwards.
“The central bank may continue to emphasise a very cautious approach and highlight internal and external risk.”
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A change is expected at the helm of the bank in March when governor nominee Mihaly Varga, the current finance minister, takes over from Gyorgy Matolcsy, whose mandate expires.
Varga’s initial comments on Monday in a parliamentary committee hearing signalled a cautious stance, with focus on price stability.
But Varga, an ally of Prime Minister Viktor Orban, comes to lead the bank at a time when the economy is barely growing, inflation is sticky and the forint fragile, while Orban faces elections in early 2026.
Elsewhere, the zloty edged down 0.16% to 4.2620 per euro.
“In our opinion, the EUR/PLN exchange rate will remain faithful to the level around 4.26. Of course, the possibility of geopolitical threats remains a risk, especially if they encounter a market that is less liquid due to the approaching holidays,” Bank Millennium said in a note.
It added that the outcome of the US Federal Reserve meeting, which ends on Wednesday, should not be a surprise and therefore was not expected to bring about market volatility.
The Fed is widely expected to cut rates by 25 basis points.
The Czech crown was also broadly steady at 25.0460 per euro, ahead of the Czech National Bank’s (CNB) meeting on Thursday.