From Morningstar: 2024-09-24 07:08:00

At the upcoming monetary policy decision on Sept 26, the SNB is expected to announce a further interest rate cut to prevent Swiss franc appreciation against the euro. Experts predict a reduction of either 0.25 or 0.50 percentage points. Karsten Junius expects a gradual approach with two further cuts to 0.5%.

Valentino Guggia also foresees a 0.25 percentage point cut due to low inflation and slow economic growth. Honegger-Romahn of AllianzGI supports this view to prevent franc appreciation. Markets were surprised by previous rate cuts and the current key interest rate in Switzerland stands at 1.25%, lower than other European banks.

Swiss inflation remains low at 1.1%, prompting forecasts of a lowered inflation outlook by the SNB. Falling interest rates aim to curb franc appreciation, but the SNB faces challenges due to already low rates. Guggia believes interest rate differentials could weaken the franc, benefiting export-oriented industries.

Interest rate cuts can impact capital markets by boosting equity prices and pushing down bond yields. Falling rates make existing bonds more attractive and lower savings account rates. Borrowers stand to benefit from cheaper consumer debt and mortgages in a lower interest rate environment.

Saron mortgages are expected to become more attractive as the key interest rate decreases. Fixed-rate mortgages in Switzerland have seen a 0.5 percentage point drop since June, with an average rate of 1.94% for a ten-year term. As rates fall, Saron mortgages may offer historically favorable terms.



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