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Latest inflation forecast points to Swiss rate rise

Summary:
The latest Swiss inflation forecast published this week by SECO points to a further rise in interest rates later this month. © Cameracraft8 | Dreamstime.comAlthough the expert group on business cycles continues to expect significantly below-average growth for the Swiss economy, with a rate of 1.1% in 2023, followed by 1.5% in 2024, its forecast inflation of 2.3% in 2023, is higher than the central bank’s target this year, pointing to an interest rate rise on 22 June 2023 when the Swiss National Bank (SNB) updates the public on its policy rate. The most likely scenario is a 25 basis point rise, but some economists even predict a 50 basis point increase. SNB President Thomas Jordan recently warned that price pressures prove more sticky than expected and therefore the fight is not

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The latest Swiss inflation forecast published this week by SECO points to a further rise in interest rates later this month.

Latest inflation forecast points to Swiss rate rise
© Cameracraft8 | Dreamstime.com

Although the expert group on business cycles continues to expect significantly below-average growth for the Swiss economy, with a rate of 1.1% in 2023, followed by 1.5% in 2024, its forecast inflation of 2.3% in 2023, is higher than the central bank’s target this year, pointing to an interest rate rise on 22 June 2023 when the Swiss National Bank (SNB) updates the public on its policy rate.

The most likely scenario is a 25 basis point rise, but some economists even predict a 50 basis point increase.

SNB President Thomas Jordan recently warned that price pressures prove more sticky than expected and therefore the fight is not over yet, wrote Bloomberg.

Jordan thinks Switzerland’s neutral interest rate – the rate at which the economy neither shrinks or grows – is 2%, a rate lower than the 2-3% in most developed countries.

A higher rate is likely to feed through to mortgage rates and eventually to the rent reference rate, both of which will likely add to the cost of housing in Switzerland for both owners and renters.

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