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Markets have been pricing in interest rate cuts for a long time, but central bankers still do not dare to turn the interest rate screw. Fed, European Central Bank, Swiss National Bank (SNB): All refrained from cutting rates, even though inflation was falling everywhere. However: The decline does not mean that prices will not continue to rise; they just aren’t increasing as dramatically as they were until last winter.
A development that pleases central bankers: The Central Bank revised its inflation forecast for the coming years downwards, especially since rents did not increase as much as feared. Inflation has returned to the SNB’s desired level. It is in the less than two percent range that the SNB equates with price stability.
No action required
This makes it clear that the interest rate cycle has reached its peak and the key interest rate will not rise above the current 1.75 percent for the foreseeable future. But don’t fall for it: Central Bank President Thomas Jordan (60) said at the media conference, “A rate cut is not an issue to be discussed at the moment.” This is the current monetary policy review that took place in Bern on Thursday.
The SNB sees no need to take any action on interest rates. Although interest rate reductions are still a long way off, this is still good news for tenants and homeowners. Because it is almost certain that the housing reference interest rate will not increase. While painful for many, rent increases are not expected to continue. Homeowners can be happy, too: Anyone with the opportunity to renew a fixed-rate mortgage no longer has to dig deep into their pockets as they did six months ago, when many people believed interest rates would continue to rise. This also has a reducing effect on the reference interest rate.
Weakening economy
There’s even a little bonus for savers: Less inflation also means less depreciation of savings in the account. As banks have been slow to pass on interest rate increases to customers, the interest rate conversion for savers has not yet been fully completed and savings interest rates may rise slightly. Investors can also be happy if they invest in stocks. Because if interest rates stop increasing, they will shine a little brighter again.
Concerns about the economy continue. Things will not go so smoothly next year, especially as the industry suffers from increasingly weak demand in key sales markets: “We expect economic growth of 0.5 to 1.0 percent for next year,” says SNB board member Martin Schlegel. (47) Talking to Blick. But the uncertainties are great. There may even be a danger of the economy shrinking in a quarter or two. “This doesn’t match our prediction, but we can’t rule it out,” Schlegel says.
This wouldn’t be such bad news for tenants and homeowners. If the economy actually grows less than predicted, the Federal Reserve may turn the interest rate screw sooner than it wants and lower interest rates.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
