SNB Preview: Acting with caution

On Thursday, March 23, at 08:30 GMT, the Swiss National Bank (SNB) is scheduled to declare its Monetary Policy Decision. As the release time draws near, below are the predictions made by the economists and researchers of 5 major banks on the impending central bank’s Interest Rate Decision.

Notwithstanding the instability in the market, the SNB is predicted to raise the policy rate by 50 basis points, to 1.5%.

Wells Fargo

“Even allowing for recent financial market strains, we believe the SNB’s policy guidance, higher Swiss inflation and the rate hike delivered by the European Central Bank point to a 50 bps rate hike in the SNB’s policy rate, to 1.50%.”

Credit Suisse

“Given recent events and the high volatility of financial markets, it seems to us that the probability of a 75 bps rate hike as initially expected has dropped significantly. Yet, a 50 bps rate hike seems appropriate, in our view.”

BBH

“Banking sector developments should not impact the SNB decision. Madame Lagarde stressed last week that there is no trade-off between price and financial stability. We concur. This was a very strong statement that suggests any banking sector issues won’t derail the tightening cycle. We think this view is held by pretty much every central bank, including the SNB, which supports market consensus for a 50 bps hike to 1.5%. The market is pricing in a peak policy rate near 1.75%, which sounds about right.”

Standard Chartered

“We expect the SNB to hike by 50 bps, taking the policy rate to 1.5% from 1.0%. Hawkish policy comments, higher-than-expected February inflation and a widening interest rate differential with other major central banks support our view. We now see a final 25 bps hike in June to a terminal rate of 1.75% (1.5% previously), followed by a pause.”

CitiBank

“We expect SNB to hike its policy rate by 50 bps to 1.5% this week despite the turmoil surrounding the banking system. If calm returns, we expect a terminal rate of 2.5%.”