���������ֳ�

Outlook Revision to Stable: ���������ֳ�’ revision of the Outlook on Hungary’s Issuer Default Ratings (IDR) to Stable from Negative reflects improved coherence between fiscal and monetary policies, which have contributed to a significant reduction in macroeconomic imbalances. Nevertheless, uncertainty remains about the government’s policy mix in the run-up to the spring 2026 general election. Rating Strengths and Weaknesses: Hungary’s ratings are supported by strong structural indicators relative to ‘BBB’ peers. Hungary is a competitive destination for FDI, notably in the automotive and battery sectors. These strengths are balanced against high public debt relative to peers, a record of unorthodox policy moves, and a deterioration of governance closer to the ‘BBB’ median. Prudent Monetary Easing: The central bank has phased out unconventional policies and maintained relatively tight monetary conditions since 2022. It has cut the key rate by a cumulative 650bp to 6.5% by October 2024, while the pace of rate cuts slowed in 2H24 due to deteriorating market sentiment. Moderation of Inflation: HICP inflation fell to 3.4% in October 2024, from a peak at 26.2% in January 2023, as the impact of the energy and food price shocks abated, and monetary policy remained restrictive. ���������ֳ� forecasts average inflation to be 3.7% in 2024 and decline to 3.4% in 2026, still slightly above the projected peer median of about 3%.