Swiss National Bank to start rate cuts earlier than expected

The Swiss National Bank (SNB) is anticipated to initiate interest rate reductions earlier than previously anticipated, according to Bloomberg survey of economists.

The initial decrease of 25 basis points is expected to occur in June, with two additional cuts projected for September and December, ultimately bringing the key rate to 1 per cent.

This revised rate trajectory, coinciding with the SNB’s policy-setting session scheduled for March 21, marks the commencement of the easing cycle one quarter earlier than indicated in last month’s survey.

Furthermore, economists participating in the survey have adjusted their inflation forecasts downwards. They now anticipate consumer-price growth to reach 1.4 per cent this year and 1.2 per cent in 2025, compared to the previous estimates of 1.5 per cent and 1.4 per cent, respectively.

“When the three rate setters of the SNB meet on Thursday, they will likely be among the first in advanced economies to be able to seriously consider an immediate rate cut. Still, with the economy holding up, pressures on the exchange rate remaining contained and inflation likely to pick up a touch, our view is that they will prefer to wait and keep rates unchanged at 1.75 per cent for now. We see the first rate cut on June 20, two weeks after the ECB is likely to start loosening policy.” Bloomberg commented.