Swiss National Bank Expected to Cut Interest Rates by 25 Basis Points - UBS Analysts
In the upcoming monetary policy statement by the Swiss National Bank, UBS analysts predict a 25 basis points interest rate cut. They believe that a more "expansive" policy stance may be necessary due to declining inflationary pressures and a stagnant growth outlook.
In the third quarter, price pressures have been below the SNB's projections, with Swiss inflation at 1.1%, the slowest among G10 economies. Business surveys indicate weak economic activity over the summer, with a slight increase in unemployment since the first half of 2023.
The Swiss franc has strengthened against the US dollar and euro since the last rate cut in June. The UBS analysts argue for a cut at the upcoming meeting, with a possibility of a larger 50-basis point cut. Failure to meet market expectations could lead to further appreciation of the Swiss franc.
Global central banks have been lowering rates to combat inflation, with the Federal Reserve and European Central Bank making recent cuts. Economists expect the SNB to lower rates to 1% this month before a pause in December.
In summary, the SNB's potential rate cut could impact currency exchange rates and borrowing costs. Investors should stay informed about central bank policies to make informed financial decisions.