SNB Seen Keeping Policy Rate Unchanged Amid Energy Price Hikes

DBS Group Research economist Philip Wee expects the Swiss National Bank (SNB) to keep its policy rate unchanged at 0% when it meets on September 24. This decision comes despite higher energy prices and a modest uptick in headline inflation.

Wee believes that there is scope for a near-term inflation forecast upgrade, but notes that Swiss growth has improved and CHF haven pressures have eased against the EUR and GBP.

The SNB may raise its near-term inflation forecast as elevated energy prices feed through into the economy amid persistent uncertainty in the Middle East. However, any hawkishness in this forecast upgrade will depend less on higher near-term inflation than on whether the SNB sees the oil shock feeding into underlying inflation.