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SNB WATCH: 50bps Hike As Inflation Eases, Rate Peak Nears


The Swiss National Bank is expected to hike by 50 basis points on Thursday, bringing its policy rate to 1%, and to indicate its willingness to allow further franc appreciation, but it could also signal that its cycle peak is near as inflationary pressures ease in the wake of previous tightening.

A 50bps move would take the SNB to one hike in March away from a peak expected by analysts at around 1.5%, after increasing rates by 75bps in June and 50bps in September. While the SNB’s projections are likely to point to inflation persisting outside its comfort zone of 0-2%, the rate of increases in consumer prices slowed to 3% in November from 3.5% in August, with little sign of significant second-round effects.


Moves to withdraw liquidity via reverse tiering, bill issuance and reverse repos, plus the lagging effects of global central bank tightening and economic slowdown may also mean downward revisions to the outlook for prices. In September, the SNB saw inflation at 3% for 2022, 2.4% for 2023 and 1.7% for 2024.

Allowing a degree of upward pressure on the franc - which appreciated by around 7% in trade-weighted terms over the summer while the dollar weakened - will also help against inflation, as Board member Andrea Maechler recently suggested (see MNI INTERVIEW: Ex ECB's Gerlach Sees Possible Rates/QT Trade-Off).

September’s State Secretariat for Economic Affairs (SECO) estimates downgraded this year’s growth outlook from 2.5% in June to 2% in September, and this time round is likely to foresee a dip to 1.1% next year. However the outlook, while weakening in the short-term, is supported by positive labour market developments.

MNI Frankfurt Bureau | +49-69-720-146 |
MNI Frankfurt Bureau | +49-69-720-146 |

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