MNI SNB Preview - June 2024: On a Knife Edge

Executive Summary:

• SNB decision could go either way, with markets seeing a 25bps cut more likely but analysts tilting slightly towards a policy rate hold on average – while some underlying considerations might suggest a hold, there is high uncertainty around the decision
• Inflation has accelerated in line with SNB expectations since the March meeting but remained well within the SNB price stability target range
• CHF has appreciated again recently, partly reversing its weakness from earlier in the year, amid slightly hawkish commentary from SNB President Jordan on FX selling and the neutral interest rate

SNBPreview-2024-06.pdf

Analyst views for the SNB’s March decision are on a knife-edge between a 25bps cut or a hold at 1.50%. The decision remains uncertain as the SNB’s target band leaves policy in a grey area – particularly as a new forecast round would likely see inflation remaining within the band over medium-term under either an unchanged, or lower, policy rate. Markets currently price in 17bps of easing for this meeting, corresponding to about a 70% implied chance of a policy rate cut.