• The Swiss National Bank is set to hold its policy rate steady at 0.00 percent at it September meeting. Despite rising inflationary pressures, I expect rates to remain on hold until at least the June 2027 meeting;

‍• The Governing Board should strike a hawkish tone by acknowledging rising inflation risks fueled by the energy price shock, franc weakness and resilient economic growth. While I expect the SNB to revise its key conditional inflation forecast upward for the coming quarters, I don’t believe the adjustment will threaten the 2 percent ceiling of its inflation target range;

• Granted, there is a scenario where renewed escalation in the Middle East and a harsh European winter send energy prices soaring like they did in 2022. Under that scenario, the SNB would be forced to hike aggressively – potentially kicking off with a 50bps hike like it did in 2022.

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