Hungary's draft 2027 budget would leave its deficit above the threshold for adopting the euro, complicating the government's goal of meeting entry criteria around 2030.
FXStreet reported that Commerzbank analyst Tatha Ghose has made adoption by 2032 his base case for the forint, Hungary's currency. That date is an analyst projection. Prime Minister Peter Magyar said in June that Hungary aims to meet the entry criteria around 2030.
The government's draft 2027 budget targets a shortfall of 4.9% of gross domestic product, down from an expected 7.5% in 2026. The 2027 target would still exceed the 3% deficit ceiling used to assess euro entry.
In June, the European Commission found that Hungary did not meet the conditions for adopting the euro, including those covering prices, public finances and exchange rates. Hungary was outside Exchange Rate Mechanism II (ERM II), which requires at least two years of participation before adoption. Euro entry also depends on interest-rate and legal conditions and requires a final decision by the Council of the European Union.
The Magyar Nemzeti Bank (MNB), Hungary's central bank, held its base rate at 5.50% on Oct. 20, effective Oct. 21. It also kept the overnight deposit rate at 4.50% and the overnight collateralized lending rate at 6.50%. The bank said its assessment of risk would take account of Hungary's fiscal path and expectations about euro adoption.
The Hungarian Central Statistical Office said consumer prices in September were 1.6% higher than a year earlier and 0.2% higher than in August. Unadjusted core inflation was 1.9% year over year. The MNB forecasts average inflation of 1.8% in 2026 and 3.1% in 2027. Its 2.5% inflation target takes effect Jan. 1, 2028.
Adopting the euro would permanently fix the forint's conversion rate and shift monetary policy to the European Central Bank. For now, Hungary must meet the entry conditions before the Council can approve that change.
The MNB plans to publish abridged minutes of its Oct. 20 meeting on Nov. 4. October consumer price data are due Nov. 10, and the bank's next rate-setting meeting is scheduled for Nov. 17.
