The Swiss government significantly lowered its inflation expectations on Thursday, which is in line with the market's expectation of another interest rate cut at the Swiss National Bank's policy meeting next week.
The Swiss National Bank will hold a policy meeting on September 26th. It is widely expected that the Swiss National Bank will once again cut interest rates. Most economists expect a 25 basis point rate cut, and investors have already priced in expectations for a larger rate cut, especially considering the continued strength of the Swiss Franc. Given the Federal Reserve's 50 basis point rate cut on Wednesday, there may be support for calls for a larger rate cut by the Swiss National Bank.
The Swiss government also predicts that the Swiss economy will grow by 1.2% in 2024, in line with previous forecasts. It is expected that the economy will grow by 1.6% next year, slightly lower than the previous forecast of 1.7%. The Swiss authorities stated in a statement, "Challenging economic conditions - especially in other European countries, coupled with the recent appreciation of the Swiss Franc, have had a negative impact on Switzerland's export sector." However, the statement also mentioned that the "exceptionally strong second quarter" will lead to "strong export growth" for the full year.