Hungary’s central bank cut its inflation target to 2.5% from 3%, effective in 2028, saying the move supports euro-adoption requirements. The decision has strengthened investor demand for Hungarian bonds as the new government pursues euro membership.
Hungary’s 10-year bond yield was 5.64%, below Poland’s 6.16% and Romania’s 7.29%. Deutsche Bank said investors had put $13.5 billion into the local bond market so far this year, including $10 billion after Peter Magyar’s April election victory. Foreign holdings reached 34% at the end of August, according to Hungary’s debt agency.
Analysts and fund managers said further yield declines depend on deficit-reduction plans, the arrival of €16 billion in EU funds unfrozen by Brussels and easing Middle East tensions. Hungary’s 2027 budget and medium-term fiscal plan are due next month; its deficit is projected at 7.5% of output this year, compared with the 3% level required for euro entry. A Reuters survey of economists sees possible ERM-2 entry in 2029 or 2030 and euro adoption in 2032, but the government has set no target dates.
