SNB Rate Seen Stuck at Zero This Year After Last Week’s Cut

A Bloomberg survey reveals a majority of economists do not expect the Swiss National Bank (SNB) to cut its policy rate into negative territory this year, despite its recent reduction. Only seven of sixteen forecasters anticipate further easing in September or December, suggesting the SNB rate will likely remain at zero through 2024.

Analysis

A Bloomberg survey of sixteen economists indicates a prevailing, albeit not unanimous, view that the Swiss National Bank will maintain its policy rate at zero through the end of the year. Despite a recent rate cut and the central bank's stated willingness to lower borrowing costs further, a majority of forecasters (nine of sixteen) do not anticipate a move into negative territory at the upcoming September or December meetings. This division among economists, with a significant minority of seven still predicting a cut, underscores the uncertainty surrounding the SNB's near-term policy path and suggests the bar for additional easing may be higher than previously perceived.

Key Decisions for Investors

• Investors should anticipate potential volatility in the Swiss Franc around the September and December SNB meetings, as the divided analyst forecast creates an environment of uncertainty.
• Positions predicated on an imminent move to negative interest rates should be re-evaluated, as the current consensus points towards a policy hold for the remainder of the year.
• Closely monitor incoming Swiss inflation and growth data, as any significant deviation could be the catalyst that shifts the SNB's stance and resolves the current split in economist expectations.