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.