MNI SNB Preview - March 2024: Dovish Tilt on the Cards
Mar-18 17:00By: Moritz Arold and 1 more...
Executive Summary:
- SNB decision could go either way, with markets split between a hold at 1.75% and a 25bps cut
- Inflation has slipped closer to the middle of the SNB target range, clearly undershooting inflation forecasts
- CHF has depreciated in nominal and real terms during first months of 2024 as SNB switch to a neutral FX approach
Full preview including summary of sell-side views here:
Market pricing and consensus views for the SNB’s March decision are on a knife-edge between a 25bps cut or a hold at 1.75%. The decision will depend on the SNB’s longer-term assessment of inflation against deflation risks, as headline CPI has printed close to the middle of the SNB’s target range in recent months. A hold would likely be accompanied with a clearly dovish tilt in communication. Markets currently price 8-9bps of easing for the meeting, corresponding to about a 2/3 implied probability of a hold, while a 25bps cut to the deposit rate would likely be accompanied with cautious language on policy ahead.
