Confidence in the Swiss economy continues to rise
Published: Wednesday, Apr 24th 2024, 10:11
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Financial analysts' confidence in the Swiss economy continues to grow. Following the SNB's surprising interest rate cut in March, participants in a survey now expect monetary policy to be significantly more expansive than in January.
Following the increases from November to March, the UBS CFA indicator showed its sixth consecutive rise in April. The indicator published by UBS rose by 6.1 points to 17.6 points in April, as the bank announced on Wednesday. In the previous month, the index had risen only minimally after turning positive for the first time in two years in February.
According to the experts, the index signals increasing economic optimism for Switzerland. The outlook for the economy as a whole has benefited from a stronger outlook for exports and also from the fact that the current situation of the Swiss economy is now seen as more robust. The outlook for other regions, on the other hand, has developed inconsistently.
The unexpected interest rate cut by the Swiss National Bank (SNB) in March led to a reassessment of Swiss monetary policy among the analysts surveyed. For example, expectations for the Saron interest rate in 12 months are significantly lower than in January at an average of 1.1 percent.
SNB likely to become more expansionary
They therefore assumed that the SNB had not simply brought forward an interest rate cut, but that it was also adopting a significantly more expansionary monetary policy with the early interest rate cut. The survey participants now expect two further interest rate cuts by April 2025.
Expectations regarding inflation have also corrected accordingly. The forecast for the current year is now 1.4% and for next year 1.2%. 80% of survey participants now expect Swiss inflation to move sideways. In the USA and the eurozone, on the other hand, a further fall in inflation is expected.
In addition, analysts expect a narrower spread between short-term euro and franc interest rates and a recovery of the franc against the euro over the next two quarters. This would therefore be a trend reversal in the EUR/CHF exchange rate compared to the weakening of the franc in recent months.
In contrast to the euro, gold is likely to continue its rally according to the forecasts. Equities, on the other hand, are unlikely to benefit in view of geopolitical uncertainties and despite expectations of lower interest rates. In contrast to gold, survey participants' confidence in a further rise in share prices has cooled considerably, according to the report.
The survey was conducted between April 11 and 18 and 34 analysts took part.
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