© Reuters. FILE PHOTO: The Swiss National Bank (SNB) building is seen near the Limmat river in Zurich, Switzerland, March 23, 2023. REUTERS/Denis Balibouse/File Photo
By Jonathan Cable
LONDON (Reuters) – The Swiss National Bank is done with interest rate hikes, according to the vast majority of economists polled by Reuters, despite mooting the prospect of further increases last week when it surprised markets by leaving borrowing costs unchanged.
On Sept. 21 the SNB held its policy interest rate unchanged at 1.75%, noting inflation – at 1.6% in August and within the central bank’s target range of 0-2% – had ebbed lower, but said further tightening could not be ruled out.
Economists thought this was unlikely.
An overwhelming 24 of 26 surveyed after Thursday’s announcement predicted no more increases in the current cycle, leaving the SNB in step with the European Central Bank, which a separate Reuters poll suggested was also finished with hikes.
“The SNB’s decision to keep rates unchanged at 1.75% was a big surprise, although it left the door open for further hikes. We do not expect any further increases in the policy rate as we expect inflation to fall next year,” said Adrian Prettejohn at Capital Economics.
“With inflation easing and the economy weakening, we expect that the SNB is internally more dovish than it is letting on.”
After last week’s meeting, SNB Chairman Thomas Jordan kept the door ajar for further hikes, saying “there is still an existing inflationary pressure, and we do not exactly know whether this inflationary pressure will increase again.”
The first cut is not expected until the fourth quarter next year, the median of a smaller sample of 17 economists showed. The SNB usually only makes policy decisions once every three months.
But forecasters were split on where the key rate would be at the end of 2024, with one putting it at 2.00%, six said 1.75% and only four holding the median view of 1.50%. Five said it would be 1.25% and one predicted 1.00%.
That would leave the SNB behind the ECB as the other Reuters poll said the euro zone’s central bank would cut rates in the third quarter, with poll medians showing 75 basis points of cuts in the second half of 2024.
(For other stories from the Reuters global economic poll:)