Inflation in Switzerland Drops to Lowest Level in Three Years

Forex - Inflation in Switzerland fell to its lowest level in three years in October, indicating that the Swiss National Bank (SNB) is likely to implement further interest rate cuts this year and in 2025. According to data from the Federal Statistical Office, Swiss consumer prices increased by 0.6% in October compared to the same month last year, while analysts had expected a rise of 0.8%. This price increase reflects the lowest level seen since July 2021, influenced by cheaper food, clothing, and household goods. Prices decreased by 0.1% compared to the previous month. Markets currently estimate a 72% chance that the central bank will lower rates from 1% to 0.75% at its next meeting on December 12, and a 68% chance of a further cut to 0.5% in March. Karsten Junius from J. Safra Sarasin stated, “The declining inflation is becoming a concern for the SNB. They will certainly cut rates by 25 basis points in December, but I wouldn’t be surprised if they cut by 50 basis points. However, I think they will prefer to hold something in reserve and will reduce rates by 25 basis points in March and another 25 basis points in June.”