FX.co ★ Forint Weakens as Orban Calls for Rate Cuts Ahead of Elections

On Tuesday, Hungary's currency, the forint, experienced a decline of over 1%, settling at 335.8 per US dollar. This marked the most significant one-day fall since late August. The decline followed increased pressure from Prime Minister Viktor Orban's administration on the central bank to reduce interest rates. The move is aimed at stimulating a faltering economy ahead of forthcoming elections in six months. On Monday, Orban commented that Hungary's interest rate, currently at 6.5%—a rate shared with Romania as the highest within the EU—was "higher than it should be." Economy Minister Marton Nagy reinforced this view on Tuesday, highlighting that borrowing costs are excessively high and suggesting that the central bank could still achieve its inflation objectives with a reduced rate. As Hungary approaches April elections, Orban, who has been in office since 2010, faces significant challenges amid a cost-of-living crisis and sluggish economic growth. Notably, headline inflation has consistently exceeded the central bank's target range of 2–4% since the beginning of the year.