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Stubborn M/T CPI Projection Means Not at Peak Yet

SNB
  • In hiking rates 25bps, the bank have signalled that they are approaching the peak rate of the cycle, with a final 25bps hike in September likely to precede a prolonged pause with a deposit rate at 2.00%. The Bank also reaffirmed their language on currency, providing further evidence that FX management will remain a key channel through which they can control financial conditions.
  • The 25bps rate hike came despite partial pricing for a 50bps step, and accompanied a revision lower for short-term CPI projections – these ticked lower into year-end 2023 (2.0% for Q4 from 2.3% prev) but were revised higher across 2024 by 0.2/0.3ppts. This leaves the prospect for prices looking brighter into year-end and alleviates the need for any further 50bps steps at the bank – however medium-term CPI projections (which assume stable rates of 1.75%) show the need to do more to anchor expectations next year
Full MNI Review including summary of sell-side views here: https://roar-assets-auto.rbl.ms/files/54311/MNISNB...

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