The Swiss National Bank (SNB) is forecast to reduce its key policy rate by 25 basis points on 20th June for the second consecutive meeting, according to a Reuters poll of economists.
Two-thirds of those surveyed anticipate this cut, and a slim majority predict another reduction in September.
Although this aligns with market expectations, which estimate nearly a 75% chance of a rate cut in June, Thursday's policy decision could be a close call due to the recent rally in economic growth and a halt in the trend of gradually declining inflation.
Despite inflation staying within the central bank's target range of 0-2% since June 2023, SNB Chairman Thomas Jordan recently indicated that the central bank perceives a “small upward risk” to its inflation forecast.
If this risk materialises, it will mean that the “monetary policy stance would be more accommodative than intended.”
Nevertheless, 22 out of 33 economists in the Reuters poll conducted from 12th-17th June forecast that the central bank would decrease its main interest rate by 25 basis points to 1.25% on Thursday.
This would come after a surprise cut in March, when the SNB became the first major central bank to reverse course on tightening monetary policy. Currently, the SNB's rate is already the lowest among G10 central banks, excluding the Bank of Japan.
“We expect the policy rate to be cut by 25bp to 1.25% at this upcoming meeting ... it is our base case because inflation is within the target range, it is expected to remain there and the SNB thinks policy is currently restrictive,” stated George Moran, European economist at Nomura.
“However, it is a very finely balanced decision.”
The Reuters poll also indicated that inflation is expected to average 1.4% this year, consistent with the latest report from May. Furthermore, inflation is anticipated to ease to 1.2% in 2025, aligning closely with the projections of the Swiss National Bank.
Meanwhile, the recent appreciation of the Swiss Franc, which has increased approximately 4% against the Euro since late May, could offer further support for easing monetary policy. However, the Swiss currency remains down about 2.8% for the year overall.
Category
deVere Switzerland’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines. Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Switzerland’s Head of Public Relations on [email protected] or call +44 2071220925
With registered Branch offices in Zurich, Geneva and Basel, deVere & Partners Switzerland SA is a financial Service provider according to the Swiss Financial Services Act. In compliance with its legal duties, deVere & Partners Switzerland SA is a member of “Finanzombudsstelle Schweiz FINOS” ombudsman’s office (“FINOS”). FINOS is an ombudsman’s office according to the Swiss Financial Services Act and has been licensed by the Swiss Federal Department of Finance. FINOS is domiciled at Talstrasse 20, 8001 Zurich, Switzerland. FINOS can be contacted at their domicile, by phone no +41 44 552 08 00 or by e-mail to [email protected].