(Bloomberg) -- The franc’s recent surge hasn’t changed economists’ views on the Swiss National Bank’s interest-rate path, even after traders pivoted bets toward more aggressive easing.
A majority of respondents in a Bloomberg survey expect just one more quarter-point cut this year, bringing the key rate to 1% next month — an outlook unchanged from July. Eight out of the 21 economists surveyed predict another reduction after that.
- Read more: SURVEY REPORT: Switzerland Economic Forecasts in Aug. 2024
Market pricing shows more confidence in further easing, with more than a 50% probability of another reduction before year-end and even a slim chance of a half-point move in September. That latter scenario isn’t expected by a single economist.
Haven flows into the franc last week pushed the currency to its strongest in nearly a decade against the euro, with data indicating that the rally has more room to run. Exporters have urged the SNB to “act quickly” to counteract the appreciation.
“The surge in market volatility and unwinding of the yen carry trade has put renewed upward pressure on the Swiss currency,” said Maeva Cousin of Bloomberg Economics, adding that this will likely see the SNB lowering rates in September instead of in December.
Still, she expects this to be the last cut in this cycle, “unless pressure on the franc intensifies further.”
- Read more: SNB INSIGHT: Carry Trade Spillover to Franc Means September Cut
While keeping their rate-path expectations unchanged from last month, economists lowered estimates for Swiss inflation. Such an outcome could prove significant because the SNB is unlikely to change tack unless the franc’s strength shows an impact on consumer-price growth.
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