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Swiss Government Sees Sharp Drop in Inflation Rate Next Year - BLOOMBERG
(Bloomberg) -- Switzerland’s government slashed its inflation forecasts, a move in line with expectations that the central bank will cut interest rates again when officials meet next week.
Consumer prices will grow at an annual 1.2% in 2024 and 0.7% in the following year, the State Secretariat for Economic Affairs said on Thursday. That’s down from a prior forecast of 1.4% and 1.1%, respectively, and compares with Swiss National Bank predictions of 1.3% and 1.1%.
SNB policymakers will meet Sept. 26 for their third rate decision of the year and are widely expected to lower borrowing costs. Most economists predict a 25 basis-point reduction while investors have priced in a bigger step, especially in sight of the persistent strength of the franc. Given the Federal Reserve made a half-point cut on Wednesday, calls for a move of that size at the SNB might now gain traction.
The authority known as SECO, which is responsible for drawing up the government’s predictions, sees the economy expanding by 1.2% in 2024, matching its prior projection. Growth will then accelerate to 1.6% next year, slightly below the 1.7% previously expected.
“The challenging economic environment, particularly in other European countries, coupled with the recent real appreciation of the Swiss franc, is adversely affecting Swiss export sectors,” SECO said in a statement. Still, the “exceptionally strong second quarter” will result in “strong export growth for the year overall,” it said.
--With assistance from Kristian Siedenburg.
