SNB likely to hike by 100 basis points on Thursday – Standard Chartered

The key event this week will be the FOMC decision on Wednesday but other central banks will also have their monetary policy meetings, including the Bank of Japan, the Bank of England and the Swiss National Bank on Thursday. Analysts at Standard Chartered see the SNB raising rates by 100 basis points, a call above the market consensus of 75 bps. 

Key Quotes: 

“We now expect the Swiss National Bank (SNB) to hike by 100bps on 22 September, taking the base rate to 0.75% from -0.25%, and out of negative territory for the first time since 2014. We previously expected it to hike by 50bps after the surprise 50bps hike in June.”

“We believe positive currency rhetoric from the SNB and increasing hawkishness among major central banks support our larger-than-consensus rate hike forecast; most economists are predicting a 75bps hike, though markets are pricing in around an 86bps step.”

“Note the SNB monetary policy committee (MPC) sets rates only once every quarter; we forecast a further 50bps of hikes each at the ECB’s October and December meetings. We see a further 75bps of tightening by the SNB in December, taking the base rate to 1.5% by end-2022 (previously 0.25%), followed by a final 50bps of hikes in Q1-2023 to a terminal rate of 2.0%.”