ZURICH: The Swiss National Bank has scope to keep its interest rate on hold at 1.75% next week before considering rate cuts next year, analysts said on Monday, after Swiss inflation further eased in November.

In the last reading before the SNB’s next monetary policy update, Swiss prices rose by 1.4% year on year, according to data from the Federal Statistics Office.

The decline, from 1.7% in October, was the sixth month in succession that Swiss inflation has remained within the SNB’s price stability target range - which the central bank defines as annual prices rising by 0-2%.

“The November inflation print came in below our expectations and the Q4 2023 inflation rate will likely fall below the SNB’s forecast of 2.0% year on year,” said UBS economist Maxime Botteron.

“In that context, it seems unlikely for the SNB to raise its policy rate on 14 December.”

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SNB Chairman Thomas Jordan said last month the central bank would monitor the development of inflation closely ahead of its rates meeting and would not hesitate to tighten monetary policy further if necessary.

The market has currently priced in a 69% probability that the SNB will keep rates unchanged next week with a 31% chance the central bank will cut rates to 1.5%.

It has priced in a 53% probability of rates being cut to 1.5% in March 2024. Swiss bank EFG International also thought the November reading, the lowest level for Swiss inflation since late 2021, pointed towards the SNB holding rates.

“The moderation in price is broad based …well below the peak of last February,” said EFG economist GianLuigi Mandruzzato. The moderation in energy prices point to Swiss inflation remaining low in December, he said, despite rising rents.

“The data supports the view that the SNB policy rates have peaked for this cycle and that the scope for rate cuts will likely increase during 2024,” said Mandruzzato, who expects the SNB to consider rate cuts from June next year.