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Barclays: Laying the Ground for Normalisation

SNB
  • We expect the SNB to sound hawkish as it lays the ground to hike in September by 25bps, with a risk of a 50bps move.
  • As global inflation prints hit new highs, and is expected to remain sticky, Switzerland has not been immune, even if the strong CHF has provided a partial shield. The SNB is no longer comfortable staying put. Inflation uncertainty has pushed the SNB to shift its rhetoric. Complaints from the banking sector and savers about negative rates are growing, as well as over financial stability concerns.
  • We expect the SNB to lay the ground for normalisation in June. Our Taylor rule model suggests the Swiss policy rate should already be at 0.2%. We expect the SNB to sound hawkish at the June meeting, to lay the ground for a 25bp hike in September. However, we would not rule out the risk of: 1) a 25bp hike at the June meeting, or 2) assuming no June hike, a 50bp initial hike in September.
  • We expect normalisation to be supported by an upward revision of inflation forecasts by the SNB, while its growth forecast is unlikely to be revised down significantly (SNB forecast for 2022 growth was 2.5% at the March meeting). We expect a resilient Swiss economy to support the SNB to hike 25bp per quarter for the next four quarters to bring the rate marginally above zero, to 0.25%, at the June meeting next year.
  • The rate path in H2 23 will depend on whether the anticipated dissipation in price pressure arrives and how well growth holds up.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Homepagemarkets-real-timeSwiss National Bank Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Homepagemarkets-real-timeSwiss National Bank Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets

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