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MNI SNB Preview - September 2022: Peer Pressure to Push 75bps Hike

Executive Summary:

  • The SNB are expected to raise rates further this quarter
  • Tailwind of overseas rates and still lofty CPI seen pushing the benchmark positive for first time in a decade
  • Most forecasts acknowledge the real risk of tightening anywhere between 50 and 100bps this month.
Full preview here:

MNISNBPrevSep22.pdf

Consensus looks for a 75bps rate rise this quarter, an acceleration of the 50bps rate rise that kicked off the tightening cycle in June, but there is little certainty among analysts. Most forecasts acknowledge the real risk of tightening anywhere between 50 and 100bps this month.

This quarter, CPI outturns again exceeded the SNB’s forecast (although the margin of error over the past three months has been considerably smaller than that seen in previous policy rounds) and will be keeping pressure on the board to act against burgeoning inflation expectations at home. This should lead to the now familiar view among the board that inflation will be hotter-than-expected in the near-term, before drifting lower and back to target across 2023. This will likely again be signalled by minor revisions among the bank’s inflation and growth forecasting.

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