β#StockMarket #SNB #ECBβ
π Switzerland: fresh risk and dim prospects β
The SNB cut the interest rate again by 25 basis points to stimulate the economy and limit the franc's rise. The monetary regulator of Europe's most stable economy again showed much more determination than its peers. This decision has already been factored into prices, although USD/CHF got slightly nervous.
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Switzerland continues to cut interest rates, which demonstrates the different approaches of the world's largest economies to monetary policy. The
SNB made its first round of rate adjustments in March; the regulator argued the achieved victory over inflation - up to that point, CPI had been hovering in the target range below 2% for several months. Now there is no such positivity on inflation, but, nevertheless, the rates were lowered.
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The Swiss National Bank (SNB) also updated its inflation forecast: 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026. These figures assume that the rate will remain at 1.25% over the forecast period. According to the latest data, Swiss inflation stabilized at 1.4% in May after a sharp rise in April and is expected to remain at that level throughout 2024.
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Fantastic? Or maybe it sounds logical?β
Inflation in Switzerland is much lower than in the eurozone, and the weaker franc will support exporters, so adjusting rates faster than a sluggish ECB is worth adjusting. The
SNB also predicts a slight rise in unemployment and a slight decline in capacity utilization. In the medium term, economic activity should gradually improve thanks to stronger demand from abroad. This active rate cut puts the franc in a vulnerable position, but calm, balanced, yet efficient economic decisions have always characterized Switzerland. The "safe harbor" reputation will not suffer.
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Let's see how the ECB and its overseas friends will respond.
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Profits to yβall!