In March, the KOF, in collaboration with the Neue Zürcher Zeitung (NZZ), asked 110 economists from Swiss universities and colleges about their estimates of inflation and monetary policy in Switzerland. More than half of the participants believe that the policy rate will be positive over the next five years. A rise in SNB interest rates is only expected once the ECB raises its key rate.
In Switzerland, consumer prices increased in February and March 2022, compared to the previous year, to a level not reached since the financial crisis of 2009. According to the economists surveyed, the main cause of the high inflation rates is an increase in costs due, for example, to high input or energy prices as well as staff or delivery shortages. Demand-related price pressure is considered less significant. Inflation rates have been rising steadily in Switzerland for several months. Rates inflation normalize soon or will inflationary trends persist for a few more months? 63% of economists who gave their opinion believe that the current price dynamics are of a (rather) temporary nature and 37% (rather) long-lasting. As for the rate of inflation five years from now, about three-quarters of survey participants expect it to be within the 0% to 2% fluctuation band set by the Swiss National Bank ( SNB).
THE MAJORITY OF RESPONDENTS CONSIDER THE SNB'S MONETARY POLICY TO BE APPROPRIATE
With a rise in consumer prices of 2.2% in February and 2.4% in March 2022 compared to the values of the previous year, inflation is outside the zone that the SNB equates to price stability. The question, therefore, arises as to whether the current monetary policy is still justified or whether a more restrictive course would be necessary to control inflation. According to the survey results, more than half of economists consider the monetary policy measures implemented in Switzerland to be appropriate, while 44% believe that monetary policy is (rather) too expansive. Over the past three years, the position was taken by economists vis-à-vis the orientation of the SNB's monetary policy has not changed much. Already at the end of 2019, during
In Switzerland, the policy rate has been negative since January 2015. More than half of the economists surveyed expect the policy rate to be positive over the next five years. They are still 38% to count on a key rate around 0%. Only 6% think the policy rate will be about the same as it is now or slightly less negative. At the end of 2019, it was not the same speech: during the survey at the time, a minority expected an imminent turning point in interest rate policy: 22% of the participants in the survey then expected a positive interest rate in the next five years. Regarding the normalization of monetary policy, the discussion often focuses on the likelihood that the SNB will raise its key rates before the European Central Bank (ECB):
ONE IN TWO PEOPLE EXPECT A NOMINAL REVALUATION OF THE SWISS FRANC
The Swiss franc has appreciated relatively continuously in nominal terms against the currencies of its main trading partners in recent years. With regard to the development over the next twelve months, more than half of the survey participants expect a (slight) appreciation of the Swiss franc.
NO CONSENSUS ON HOW THE ECB'S COURSE SHOULD BE ADAPTED TO THE WAR IN UKRAINE
The ECB is also currently in a difficult situation: while the sharp rise in consumer prices would rather argue in favor of a more restrictive monetary policy, the economic risks linked to the war in Ukraine rather call for a more expansive orientation. The researchers surveyed are not unanimous about how the ECB should adjust its monetary policy following the war in Ukraine: 35% are in favor of a (slightly) more restrictive monetary policy stance, 46% an unchanged stance, and 19 % of a (slightly) more expansive orientation compared to a hypothetical situation without war.