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Livesquawk - SNB Expected To Stay The Course On Rates, Guidance
SNB Expected To Stay The Course On Rates, Guidance
Inflation is growing in Switzerland.

- Benchmark interest rate set to remain at global low of -0.75pct

- Bank to reiterate willingness to intervene on FX markets

- Few or no changes likely for forward guidance, forecasts

- Reports say SNB President Jordan to attend meeting

- Decision due Thursday at 07:30 GMT


By Eric Culp, European Editor

LiveSquawk News


22 September 2021 | 07:15 GMT


The Swiss National Bank is widely expected to hold interest rates at current levels as central bankers around the world consider their next steps now that Covid-19 cases seem to be under control in some countries and regions.


Economists say they expect both the main policy and sight deposit interest rates to remain at -0.75%, currently the lowest in the world. Few changes if any are anticipated for the SNB’s forward guidance, and Swiss central bankers are expected to repeat economic projections from the last rate decision in mid-June.


Something else that should be the same is SNB President Thomas Jordan’s participation in this week’s meeting. His attendance was in doubt after he reportedly underwent heart surgery last month following a routine check-up, but media reports say he will be on hand to talk monetary policy with the rest of the bank’s three-person governing board. And talking will likely be the only thing the trio does this time around for the trio. 


David Oxley, senior Europe economist at Capital Economics said rate-setters are expected to “copy and paste the bank’s many oft-used phrases that we know and love.


“Things might [emphasis his] have been a bit more interesting had the meeting been held a month ago, when the franc was at a nine-month high against the euro. As it happens, the currency has dropped by more than 2% since, and fell below CHF 1.09 this week for the first time since July.”


Furthermore, he noted that alpine policymakers are still looking north to take cues from European Central Bank headquarters in Frankfurt. “The bigger picture is that the SNB’s boat is lashed as tightly as ever to the ECB’s, and so the stage is set for many more years of policy stasis.” (Read our review of the latest ECB meeting here.)


Inflation on the rise

Switzerland has also experienced surging consumer price growth as rising costs for energy, raw materials, transport, food and other products fuel inflation around the globe, with many countries reopening for business following the lifting of pandemic measures, some of which brought wide swathes of the global economy to a virtual standstill last year.


HSBC said Swiss policymakers will likely echo the sentiments of rate-setters in other countries and classify the recent price increases as transitory. “Given the temporary nature of these effects and the continued upward trend in the Swiss nominal effective exchange rate since June, the SNB is unlikely to revise up its long-term inflation forecasts markedly, in our view. Therefore, we expect no major shift in language and think the SNB will reaffirm the importance of negative rates and FX intervention to curb the strength of the franc, if necessary.”