Hungary’s central bank lowered its inflation target to 2.5% from 3%, effective in 2028, sending a signal that the new government remains committed to adopting the euro. The National Bank of Hungary said the change should anchor inflation at lower levels and support meeting euro-adoption requirements. Hungarian benchmark bonds have outperformed Polish and Romanian debt, with the 10-year yield at 5.64%, compared with 6.16% in Poland and 7.29% in Romania. Foreign holdings of forint-denominated bonds have reached their highest level since 2019, while Deutsche Bank estimates overseas investors invested $13.5 billion in Hungary’s local bond market year-to-date, including $10 billion after Peter Magyar’s April election victory. Analysts say further gains depend on deficit reduction, the release of €16 billion in European Union funds and easing geopolitical risks. Hungary could enter ERM-2 (the euro’s exchange-rate waiting period) in 2029 or 2030 and adopt the currency in 2032, although the government has not set official dates. Investors will focus on the 2027 budget and medium-term fiscal plan due next month, particularly whether they show a credible route toward the 3% deficit threshold required for euro adoption. The deficit is projected at 7.5% of economic output this year, leaving room for disappointment and a possible repricing if policy delivery falls short.