Swiss National Bank: Policy rate seen on prolonged hold – Nomura
Nomura’s Anderson, Buckley and Szczepaniak expect the Swiss National Bank (SNB) to keep its 0.00% policy rate unchanged for the foreseeable future, with inflation below 1% and the neutral rate estimated at around 0%.
The Swiss National Bank (SNB) is expected to keep its 0.00% policy rate unchanged for the foreseeable future, according to Nomura analysts. Inflation remains below 1% and the neutral rate is estimated at around 0%. Factors contributing to Switzerland's low inflation and comparatively low policy rate include the strong Swiss Franc (CHF) and the country's energy mix, which relies heavily on hydropower and nuclear power.
Unlike the European Central Bank (ECB), which forecasts further rate hikes, the SNB is unlikely to raise its policy rate soon, despite inflation running below 1% year-over-year. However, the SNB has expressed caution about potential side effects of a negative policy rate. During periods when the two central banks moved in tandem, changes in policy rates varied between the SNB and ECB.
The SNB's low policy rate compared to the ECB's can be attributed to Switzerland's low inflation and structural factors, such as the currency's strengthening and the energy mix.
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