Economy · June 23, 2022

Monetary policy Switzerland June 2022

At its meeting on June 16, the Swiss National Bank (SNB) raised the policy rate and the interest rate on sight deposits from minus 0.75%, the lowest in the world, to minus 0.25%. The decision to raise rates took the markets and our speakers by surprise.

As the Bank stated in its press release, the move was “aimed at preventing a wider spread of inflation to goods and services in Switzerland”. Inflation has been on an upward trend in recent months in light of higher international commodity prices and global supply constraints, and is now at its highest for over a decade. As a result, the SNB revised its inflation forecasts upwards to 2.8% for 2022 and 1.9% for 2023. The strong domestic economy has provided room for maneuver for the upside, so such as the Bank’s reduced concern for currency strength: in the June press release there was no mention of the strength of the franc, contrary to previous meetings.

Looking ahead, the SNB hinted at further hikes, stating: “It cannot be ruled out that further hikes in the SNB policy rate will be needed in the near future to stabilize inflation.”

Credit Suisse economist Maxime Botteron commented:

“We have revised our forecast for the policy rate and now we expect the SNB to raise it by 0.5 percentage points in September to 0.25% and to 0.50% in December. We have set our 12-month forecast at 0.50%. “

ING analysts were more accommodating:

“Given the inflation outlook and the economic environment, we believe a further 25bp rate hike is to be expected this year, but we believe the SNB is unlikely to go any further this year. In our view, once the policy rate moves to 0%, any further rate hikes would be for 2023. The SNB should therefore be less aggressive in its rate hikes than the ECB. “

Our rapporteurs are currently revising their forecasts, with a new consensus to be published on 26 June.