April 24, 2024

According to a Bloomberg survey of economists, the Swiss National Bank (SNB) is expected to start easing its monetary policy earlier than previously anticipatedThe central bank is now projected to kick off its interest rate-cutting cycle in June, showing it shifted from expectations of just a month ago.

The survey, conducted between March 8-14, forecasts the SNB will deliver a 25 basis-point rate cut at its June policy meeting. Two additional 25 basis-point cuts are predicted to follow in September and December, bringing the critical policy rate down to 1% by the end of 2024.

Advancing the Timeline for Policy Easing

The new rate path outlined by the economists surveyed by Bloomberg represents an acceleration in the anticipated timing for policy easing by the SNB. Just last month, the consensus was that the central bank would hold off on rate cuts until the third quarter of 2024.

The shifting expectations come as the SNB prepares to set policy for the first time this year at its March 21 meetingWhile no rate change is widely expected this week, the survey results suggest economists now see the central bank embarking on a rate-cutting cycle sooner rather than later.

In addition to bringing forward their projections for when the SNB will start lowering interest rates, the economists surveyed by Bloomberg have revised their forecasts for inflation in Switzerland. The survey participants now see consumer price growth averaging 1.4% this year, down from a previous forecast of 1.5%. 

For 2025, they expect inflation to moderate further to 1.2%, compared to an earlier projection of 1.4%. The lower inflation outlook likely factors into the economists’ views that the SNB will have more leeway to start cutting rates sooner to support the Swiss economy.

Balancing Act for the SNB

As Bloomberg Economics analyst Maeva Cousin notes, the SNB will face a delicate balancing act at its upcoming policy meeting this week. While inflationary pressures appear to be easing, providing scope for potential rate cuts, the Swiss economy has remained relatively resilient.

The central bank will monitor any potential exchange rate pressures on the Swiss franc that could arise from shifting policy stances among major central banks like the European Central Bank (ECB) and the Federal Reserve.

According to Maeva Cousin’s assessment, the SNB will likely prefer to keep its policy rate unchanged at 1.75% despite the growing expectations for rate cuts to commence later this year. 

The Bloomberg Economics view aligns with the survey, projecting the first SNB rate cut will come on June 20, about two weeks after the ECB is anticipated to begin its easing cycle. As central banks worldwide grapple with the appropriate policy stance amid evolving economic conditions, the SNB finds itself in a relatively unique position. 

The latest Bloomberg survey suggests that economists see the Swiss Central Bank starting to move towards easing monetary policy sooner than expected.

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