Swiss inflation falls short of predictions in Nov. ’24

Swiss annual inflation rose to 0.7 per cent in November from 0.6 per cent in October, falling short of the 0.8 per cent forecast by analysts, according to the Federal Statistics Office.

Month-on-month, consumer prices dipped 0.1 per cent, aligning with market expectations.

The Swiss National Bank (SNB), which targets inflation between zero per cent and 2 per cent, has already lowered its benchmark interest rate by 25 basis points three times in 2024, bringing it to 1 per cent.

Market odds now suggest a 71 per cent likelihood of a 50 basis point cut at the SNB’s December 12 meeting, compared to a 29 per cent probability for a smaller 25 basis point reduction.

J. Safra Sarasin’s Chief Economist, Karsten Junius, anticipates a 50 basis point cut in December, followed by two additional 25 basis point reductions in early 2025, which could bring the rate to zero per cent. Junius did not rule out negative rates but called it a “high hurdle.”

The SNB may also consider foreign exchange interventions to stabilise the franc, though current valuation levels do not signal a significant overvaluation.

Attribution: Reuters