--- title: "SNB: No longer restrictive, easing the upward pressures on the CHF" description: "The SNB has lowered its key rate again today, to 1.25%, after the previous 25bp cut decided in March. This decision appears grounded in a combination of three factors: inflation is on a stable and moderate trajectory, economic growth remains soft and excessive upward pressures on the CHF may arise during the summer.. With this decision, the SNB has likely completed its monetary policy recalibration and is unlikely to cut rates further this year.. Should European or global developments trigger volatility and upward pressures on the CHF, the SNB will probably resort to interventions on the FX market to manage the impact on the economy, rather than use the interest rate lever." image: https://blog.syzgroup.com/hubfs/Flash_2024-06-20_cover.jpg --- [![Syz Private banking](https://blog.syzgroup.com/hs-fs/hubfs/Logo.png?width=140&name=Logo.png "Syz Private banking")](https://www.syzgroup.com/fr) ## **Thinking** out loud [Subscribe](https://25733253.hs-sites-eu1.com/newsletter-signup?hsLang=en) [![Contact Us](https://hubspot-no-cache-eu1-prod.s3.amazonaws.com/cta/default/25733253/3d762f49-4e71-4f99-97b1-bf6781ef3da2.png)](https://hubspot-cta-redirect-eu1-prod.s3.amazonaws.com/cta/redirect/25733253/3d762f49-4e71-4f99-97b1-bf6781ef3da2) - [OUR SERVICES](https://www.syzgroup.com/en/private-banking) - [ABOUT SYZ](https://www.syzgroup.com/en/about/welcome-to-syz) - [CAREERS](https://www.syzgroup.com/en/careers) - [PRESS](https://www.syzgroup.com/en/news) - [Blog Homepage](https://blog.syzgroup.com) - [Slow Food for Thought](https://blog.syzgroup.com/slow-food-for-thought) - [Focus](https://blog.syzgroup.com/slow-food-for-thoughts/tag/focus) - [Asset allocations Insights](https://blog.syzgroup.com/slow-food-for-thoughts/tag/asset-allocation-insights) - [Market Outlook](https://blog.syzgroup.com/slow-food-for-thoughts/tag/market-outlook) - [Swiss Perspectives](https://blog.syzgroup.com/slow-food-for-thoughts/tag/swiss-perspectives) - [Syz the moment](https://blog.syzgroup.com/syz-the-moment) - [Crypto corner](https://blog.syzgroup.com/crypto-corner) - [Syz AI Insights](https://blog.syzgroup.com/syz-ai-insights) - [Fast Food for Thought](https://blog.syzgroup.com/fast-food-for-thought) - [The week in seven charts](https://blog.syzgroup.com/fast-food-for-thoughts/tag/the-week-in-seven-charts) - [Flash](https://blog.syzgroup.com/fast-food-for-thoughts/tag/flash) - [Fixed Income Weekly](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-fixed-income) - [Equity Weekly](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-equities) - [Global markets outlook](https://blog.syzgroup.com/fast-food-for-thoughts/tag/global-markets-outlook) - [CONTACT](https://www.syzgroup.com/en/contact-us/form) - [ENGLISH](https://www.syzgroup.com/) - [FRANÇAIS](https://www.syzgroup.com/fr) - [Slow Food for Thought](https://blog.syzgroup.com/slow-food-for-thought) - [Focus](https://blog.syzgroup.com/slow-food-for-thoughts/tag/focus) - [Asset allocations Insights](https://blog.syzgroup.com/slow-food-for-thoughts/tag/asset-allocation-insights) - [Market Outlook](https://blog.syzgroup.com/slow-food-for-thoughts/tag/market-outlook) - [Swiss Perspectives](https://blog.syzgroup.com/slow-food-for-thoughts/tag/swiss-perspectives) - [Fast Food for Thought](https://blog.syzgroup.com/fast-food-for-thought) - [Flash](https://blog.syzgroup.com/fast-food-for-thoughts/tag/flash) - [Weekly Fixed Income](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-fixed-income) - [The week in seven charts](https://blog.syzgroup.com/slow-food-for-thoughts/tag/the-week-in-seven-charts) - [Global markets outlook](https://blog.syzgroup.com/fast-food-for-thoughts/tag/global-markets-outlook) - [Weekly Equities](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-equities) - [Syz the moment](https://blog.syzgroup.com/syz-the-moment) - [Crypto corner](https://blog.syzgroup.com/crypto-corner) - [Syz AI Insights](https://blog.syzgroup.com/syz-ai-insights) - [Our Services](https://www.syzgroup.com/en/private-banking) - [About Syz](https://www.syzgroup.com/en/about/welcome-to-syz) - [Careers](https://www.syzgroup.com/en/careers) - [Press](https://www.syzgroup.com/en/news) - [Contact](https://www.syzgroup.com/en/contact-us/form) - [English](https://www.syzgroup.com/) - [Français](https://www.syzgroup.com/fr) ## **Sign-up** for our newsletter This website uses cookies to enhance user navigation and to collect statistical data. You can change your settings below to refuse the use of cookies. For more information, please refer to the [Cookies policy](https://www.syzgroup.com/en/legal-notices). Mandatory cookies Functional cookies Statistics & marketing I confirm I am not a US citizen residing in the US I confirm I am not accessing this site from the US I confirm that I am not a resident of Canada (except for Ontario, Quebec, British Columbia or Alberta). Agree and confirm ### Restricted access We are sorry that for legal reasons we are not able to help US citizens or Canadian residents other than in Ontario, Quebec, or Alberta. Best wishes for the future… ### Restricted access We are sorry that for legal reasons we are not able to help US citizens or Canadian residents other than in Ontario, Quebec, or Alberta. Best wishes for the future… You chose the following profile. If you made a mistake, please change here USA Country Switzerland Canada: Other than Ontario, Quebec, Alberta Canada: Ontario, Quebec or Alberta USA Other country Language Language English French German Italian I confirm Legal information This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document. [Food for Thought](https://blog.syzgroup.com/fast-food-for-thought/tag/food-for-thought) ### SNB: No longer restrictive, easing the upward pressures on the CHF The SNB has lowered its key rate again today, to 1.25%, after the previous 25bp cut decided in March. This decision appears grounded in a combination of three factors: inflation is on a stable and moderate trajectory, economic growth remains soft and excessive upward pressures on the CHF may arise during the summer.. With this decision, the SNB has likely completed its monetary policy recalibration and is unlikely to cut rates further this year.. Should European or global developments trigger volatility and upward pressures on the CHF, the SNB will probably resort to interventions on the FX market to manage the impact on the economy, rather than use the interest rate lever. [![Adrien Pichoud](https://blog.syzgroup.com/hubfs/_ERC1697%202.jpg)](https://blog.syzgroup.com/fast-food-for-thought/author/adrien-pichoud) [**Adrien Pichoud**](https://blog.syzgroup.com/fast-food-for-thought/author/adrien-pichoud) Head of Fixed Income **Thursday, 06/20/2024** | - [![Pdf](https://blog.syzgroup.com/hubfs/pdf%20(1).png)](https://blog.syzgroup.com/hubfs/Syz_Flash_2024-06-20.pdf?hsLang=en) - - - - --- ## **Inflation is expected to settle comfortably withing the SNB’s target range**   Latest inflation data has been in line with expectations, showing no sign of unwelcome development in consumer prices. The inflation rate over the past twelve months remains stable at +1.4%, in line with the SNB projections, and remain well within the 0-to-2% inflation target of the central bank. The updated SNB inflation projections today anticipate a slight reacceleration to +1.5% in Q3, followed by a return to a disinflationary trend towards 1.0% by 2026. As inflationary dynamics are consistent with the SNB’s definition of “price stability”, the SNB has no reason to maintain a restrictive monetary policy.     **Inflation is within the SNB target range, and trending toward 1% in the coming years** **![](https://blog.syzgroup.com/hs-fs/hubfs/image-png-Jun-20-2024-02-34-05-0365-PM.png?width=498&height=375&name=image-png-Jun-20-2024-02-34-05-0365-PM.png)** --- ## **Growth will likely remain below potential for some time** Recent economic indicators suggest that economic growth in Switzerland remains sluggish. Subdued expansion in the service sector and continuing contraction in the industry point to moderate expansion for the remaining of the year (1% GDP growth expected for 2024). In the manufacturing sector, the trend has been encouraging lately, as external demand, especially from Europe, gradually recovers. But GDP growth will likely remain below potential this year before reaching 1.5% in 2025. **Economic growth is gradually recovering but remains moderate** **![](https://blog.syzgroup.com/hs-fs/hubfs/image-png-Jun-20-2024-02-35-11-4453-PM.png?width=493&height=341&name=image-png-Jun-20-2024-02-35-11-4453-PM.png)** --- ## **Upward pressures on the CHF could resurface during the summer** The recent appreciation of the CHF, especially vs EUR, has likely been an additional factor prompting the SNB to act today, rather than wait for the September meeting. In particular, the resurgence of political uncertainties in Europe and France is increasing the risk of undue CHF appreciation in the coming weeks, which would negatively impact the still struggling manufacturing sector. In that sense, today’s decision is also likely intended to take the wind out of the sails of potential upward pressure on the CHF ahead of an uncertain summer in Europe. During the press conference, Thomas Jordan referred to political uncertainties in Europe as a source of uncertainty around the inflation outlook, that makes the SNB ready to be active in the foreign exchange market as necessary. **The Swiss franc has recently resumed an upward trend after the early-2024 pullback** **![](https://blog.syzgroup.com/hs-fs/hubfs/image-png-Jun-20-2024-02-36-07-8145-PM.png?width=498&height=364&name=image-png-Jun-20-2024-02-36-07-8145-PM.png)** --- ## **The SNB is now done with the recalibration of its monetary policy**   With this decision, the SNB is now likely done with the recalibration of its monetary policy. Unless unexpected developments on the growth and inflation front in the coming months, it will likely not cut rates further this year. Thomas Jordan referred to the neutral rate in Switzerland as being probably “*at 0% or a little above 0%*”. With today’s decision, the real CHF cash rate is now slightly below 0% (1.25% CHF rate minus 1.4% inflation = -0.15% real rate), tilting the monetary policy stance toward the accommodative side. Based on current inflation projections, it will still be at this level at the end of the year if the SNB keep the cash rate at 1.25%. Monetary policy will therefore remain slightly accommodative in Switzerland for the second half of the year, which appears perfectly suited to support the ongoing gradual recovery in economic growth. If inflation continues to slowdown in 2025 toward 1%, and growth converges toward its potential, another 25bp rate cut might be warranted next year, but the SNB can afford to wait, and a lot can happen by then. In the meantime, should European or global developments trigger volatility and upward pressures on the CHF, the SNB will rather resort to interventions on the FX market to manage the impact on the economy, rather than use the interest rate lever. Mr Jordan has repeatedly said that the SNB was ready to do so.   --- #### Disclaimer This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document. Read More ## Related Articles [The week in seven charts](https://blog.syzgroup.com/fast-food-for-thought/tag/the-week-in-seven-charts) #### [Four years into the bull market](https://blog.syzgroup.com/fast-food-for-thought/four-years-into-the-bull-market?hsLang=en) Meanwhile, earnings growth, not valuation expansion, is doing the heavy lifting behind the S&P 500’s rally. 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