SNB expected to decide 100 basis points hike

The key event this week will be Wednesday’s FOMC decision, but other major central banks will also have their monetary policy meetings, including the Bank of Japan, the Bank of England and the Swiss National Bank on Thursday.

The SNB is expected to raise rates by 100 basis points above the market consensus of 75 bps on 22 September, taking the base rate to 0.75% from -0.25%, and out of negative territory for the first time since 2014.

Most analysts believe positive currency rhetoric from the SNB and increasing hawkishness among major central banks support our larger than consensus rate hike forecast; most economists are predicting a 75bps hike, though markets are pricing in around an 86bps step.

The SNB’s monetary policy committee (MPC) sets rates only once every quarter; but forecasts indicate a further 50bps of hikes each at the ECB’s October and December meetings in addition to an additional further 75bps of tightening by the SNB in December, taking the base rate to 1.5% by end-2022.