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With the global economy reeling from the effects of the U.S.-Israeli attacks on Iran, the results of the Hungarian elections on April 12 represented “a 180 degree change of direction, and the financial market community has taken this very positively,” Török told foreign journalists on May 20 in a broad analysis of the domestic economy.
“Tisza policies were very much favored by the financial markets. The pro-EU stance, very much opposite to the previous [government] stance [and] a very outspoken plan to introduce the euro, meeting the Maastricht criteria by 2030. That’s not impossible, I think it’s doable, but it’s very ambitious, and all of a sudden, a further HUF strengthening came and the risk premium [on government bonds] started to decrease, quite significantly,” he said.
Yields on domestic 10-year government bonds have seen “massive spread compression,” and by the week beginning May 11, the yield on the Hungarian paper was lower than on the Polish bonds, he noted.
“To put into numbers, normally the yield of a similarly developed, or a less developed euro-zone country for the 10-year government bond is around 400 basis points. In the case of Hungary, today it is 550-560 basis points, but it was around 700 previously [for much of 2025], so it’s a massive compression,” he said.
(A later check revealed the yield had fallen to 530 basis points on June 1.) This represents a strong expression of the markets’ belief in government policies.
However, Török was keen to stress this was just the beginning of the economic journey, and there remains a 150 (now 130) basis points spread to be eliminated before the markets indicate their belief that Hungary is ready to request entry to the Exchange Rate Mechanism (ERM2) before complete euro adoption.
Nonetheless, as far as the markets are concerned, “Half of the road is already done, within weeks. And the next half, in terms of convergence, will come in the next couple of years. So that’s how rapid and fast the reaction of the financial markets has been after the Tisza victory.”
But this begs a question: are the markets correct, or have the bond buyers also been influenced by the general public euphoria since April 12? The forint has continued to strengthen, breaking through 370 to the euro in the immediate aftermath of the election, firming to a little under 354 on June 1.
Given that the Hungarian currency started the year trading around 385 to the euro, this represents a gain of some 8% this year, a boon to fighting inflation by damping import prices, but a headache for manufacturers dependent on exports.
For Török, there are “multiple reasons” for the forint’s surge. “First, the central bank, under newly appointed governor Mihály Varga last year, stressed that the inflation target could not be reached with a continuously depreciating forint. Therefore, it maintained the base rate unchanged at 6.5% (until last February) against the global trend to trim rates at the time, he said. This stimulated investor appetite.
Next, from the spring of 2025, opinion polls increasingly pointed to a Tisza victory in this year’s elections, and leader Péter Magyar’s pledges to fight corruption, access frozen European Union funds and have Hungary join the common currency were music to the ears of investors weary of erratic Fidesz-government moves.
Moreover, in the wake of his election victory and in contrast to the prime minister-elect’s withering criticism of many Orbán appointees in the former government camp, Magyar singled out Varga (a Fidesz survivor from its early student days) as “someone we can work with,” calming any fears of a destructive Tisza “witch hunt” based purely on political leanings.
But what, since taking power, has the Tisza party done to make good on its election promises?
“The positive element is obviously unfreezing the EU funds. I think it’s doable. Hungary needs to restore the rule of law, to install all those legislative changes required by and put in the 27 super milestones. Most of these refer to anti-corruption measures and the [reform of] the public procurement system. I think it can be done in a very short time,” said Török.
(Nine days later, a jubilant Magyar, appearing with Ursula von der Leyen in Brussels on May 29, would have you believe so too, after announcing a “historic” breakthrough on releasing EUR 16.4 bln in frozen EU funding. However, this deal, positive as it is, remains contingent on Hungary completing all legal reforms on time.)
If achieved, Török says it will boost the economy by 1.5 percentage points in 2027. This, coupled with the clutch of major auto and battery plant investments now beginning production, will result in GDP growth jumping from 1.3% this year to 3-3.5% next, he predicts.
Still, two thorny issues remain: the Hungarian budget and Tisza’s election promises. Soon after his victory, Magyar revealed that the books were looking worse than the Fidesz administration had let on; rather than a deficit of 5% of GDP (itself an expansion of the original 3.7% target), pre-election giveaways had pushed the hole to around 6.8%.
Next, in the first days after taking power, the government said the Fidesz-initiated price caps on auto fuels, retail food items and utilities, along with special taxes on banks and financial institutions, would stay in place for the time being to ease inflationary pressures.
“Honestly, I expected that the fuel price cap would be eliminated by end of May, but [Minister of Economy and Energy István] Kapitány said they are going to keep it […], and food margin caps will be dropped only in the medium run,” Török said.
In truth, these moves will temper inflation; the Raiffeisen researcher now forecasts the end-of-year figure at 5% rather than his earlier 6%.
But, he adds, “Eventually, it has to come. I understand it’s politically very sensitive, but you must do some politically unpopular measures, and when should you do these if not at the beginning of your rule?” As for the many expensive election promises, Török is skeptical.
“If you read the Tisza program carefully, you see they would like to keep all these goodies which Fidesz gave the population, and on top of that they will extend them. In the case of personal income tax, there is this 9% bracket from next year for low-wage earners,” he notes.
Such largesse would put yet more strain on the budget, even if relieved by EU funding. However, Török notes the ministerial hearings in parliament in May did not always match Tisza’s manifesto promises.
“On many points, the [incoming] ministers did not touch on these promises, or were very imprecise. So, it’s possible not all will be delivered, at least not in the beginning of the four-year political cycle,” he concluded.
This article was first published in the Budapest Business Journal print issue of June 5, 2026.
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