The medium-term outlook for SNB key rates remains unchanged
At the beginning of June, Swiss government bond yields and mortgage interest increased slightly. Before the assessment of the situation by the Swiss National Bank (SNB), the bond markets were no longer certain that it would lower its key rate again in June.
At its meeting, the SNB once again lowered its key rate by 0.25 percentage points to 1.25%. We still expect another 0.25 percentage point rate cut over the coming quarters. Even if, in recent quarters, the SNB has sometimes surprised markets and economists with the timing of its rate cuts, we continue to believe that key rates will remain at 1% in the medium term. The SNB should then consider this interest rate as neutral, that is to say neither stimulating nor restrictive for the economy, and thus close the cycle of rate cuts.
A significant change in long-term mortgage interest is often linked to a significant change in the medium-term outlook for policy rates, which we do not expect over the next twelve months. On the other hand, mortgage interests linked to SARON should benefit from the probable drop in key rates over the coming quarters.
Current yields already reflect rate cuts planned for coming quarters. It is therefore very unlikely that we will see another decline this year. If inflation or growth falls more than expected, yields could rise again.
Please note that the interest rate shown is a forecast, which may vary downward or upward.
