Monetary policy divergence persists
While the SNB and the ECB have both paused their rate cut cycles, the Fed has resumed rate cuts after a longer break. Here's where these three central banks are at:
SNB
The SNB left its key interest rate at 0% in September. SNB hat den Leitzins im September unverändert bei 0% belassen. Negative interest rates require clear-cut deflation or a clear weakening of the economy, neither of which is currently evident. The SNB is holding monetary policy steady, and the Swiss franc is appreciating, particularly against the US dollar.
ECB
The ECB's rate cut cycle is over for now. Budget problems of individual Eurozone member states are no reason to adjust interest rate policy. Only unequivocal signs of deflation could justify further cuts, though some fine-tuning until year-end is possible.
Fed
The Fed reduced the federal funds rate by 25 basis points in September. Inflation risks are continuing to grow, while the labor market is losing steam. Further rate cuts are likely to be done in a guarded manner – a further rate cut in October now is considered the baseline scenario.
Read our latest "Outlook Monetary Policy" to find out how we assess the situation and what portfolio implications we see: DE | EN
