Rising Swiss inflation will not derail rate cuts, economists say
2024.05.02 08:12
ZURICH (Reuters) – Swiss annual inflation in April accelerated faster than expected, data from the Federal Statistics Office showed on Thursday, although economists said they still expected the Swiss National Bank to make further interest rate cuts.
Inflation rose to 1.4% in April from 1% in March, outpacing the 1.1% rate forecast by a Reuters poll of economists, strengthening the Swiss franc versus the euro and the dollar.
Month-on-month, prices in Switzerland rose 0.3%, higher then the 0.1% rate forecast.
The SNB declined to comment.
April was the 11th month in a row the rate remained within the central bank’s 0-2% target range, and markets have priced in a 60% probability of a cut to 1.25% at its next meeting on June 20.
“With energy prices easing again and the further normalisation expected in services prices due to weak domestic demand, conditions remain in place for the SNB to cut the policy rate again in 2024, perhaps already at the next meeting in June,” GianLuigi Mandruzzato, an economist at EFG Bank, said.
Although the April upturn was stronger than expected, it did not indicate inflation was becoming entrenched, for example via higher wages, UBS economist Alessandro Bee said.
“We still think that the SNB is willing to bring monetary policy from ‘restrictive’ territory more to a ‘neutral’ territory in 2024,” he said.
“The current policy rate of 1.5% is rather on the restrictive side which is why we still think that a rate cut in June to 1.25% is likely – especially when the ECB will most likely start its rate cutting cycle in June.”
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