Switzerland’s government expects inflation to exceed the central bank’s goal in 2023 — reinforcing arguments for an interest-rate hike on Thursday.
(Bloomberg) — Switzerland’s government expects inflation to exceed the central bank’s goal in 2023 — reinforcing arguments for an interest-rate hike on Thursday.
Consumer prices will rise 2.2% this year, the State Secretariat for Economic Affairs, or SECO, which draws up economic forecasts for the government, said Wednesday. That’s down from its June estimate of 2.3% but still above the top end of the Swiss National Bank’s 0%-2% target range.
SECO boosted its 2024 projection, however, to 1.9% from 1.5%. It predicted economic expansion, under its preferred measure, of 1.3% this year and 1.2% next.
“The economic risks are substantial,” SECO said in a statement. “The transmission of monetary-policy tightening to the real economy could also turn out to be stronger than currently assumed.”
The SNB is widely expected to raise rates by 25 basis points to 2% when it meets Thursday in Zurich, with most economists predicting borrowing costs will then be left at that level for about a year.
Some, though, say the central bank may skip a hike this week in favor of a later move, citing a recent retreat in inflation and the dangers to the economy from further tightening.
After expanding at an unexpectedly strong 0.9% at the start of the year, Swiss output stalled in the second quarter, as companies grappled with subdued foreign demand and a strong franc.
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