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Too early for Switzerland’s central bank to change policy…

At its latest  quarterly monetary policy assessment unveiled today, the Swiss National Bank (SNB) maintained its accommodative monetary policy. The target range for the 3-month Libor was kept between -1.25% and -0.25%, the interest rate on sight deposits with the SNB was maintained at a record low of -0.75%, and the central bank reiterated its […]

Europe chart of the week – SNB FX intervention

In the wake of the financial crisis, the Swiss National Bank (SNB) increased massively the monetary base to provide liquidity and limit the Swiss franc’s appreciation. The expansion in the monetary base can essentially be seen in the form of an increase in sight deposits held by domestic Swiss banks at the SNB. The SNB […]

Italy: Political fragmentation leads to a hung parliament

Italian voters have shifted significantly to the right and towards populist parties in Sunday’s election, with a huge split between the North and the South. More than 50% of the votes went to Eurosceptic parties (Five Star Movement and the Northern League). As no single party or coalition won an absolute majority, negotiations to form […]

SNB confirms record profit for 2017

The Swiss National Bank (SNB) published its 2017 annual result today. The SNB confirmed a profit of CHF54.4bn in 2017. This was more than double the 2016 figure (CHF24.5bn) and its biggest profit ever. Earnings from the SNB’s foreign currency positions amounted to CHF49.7bn, its gold holdings increased in value by CHF3.1bn and its Swiss […]

Switzerland: So far so good

Switzerland lagged the US and the euro area in terms of annual GDP growth for the third consecutive year in 2017, but today’s data confirm that the Swiss economy is continuing its recovery. Economic prospects for this year look promising. We expect growth in the Swiss economy to accelerate from 1.0% in 2017 to 2.0% […]

Who will tackle Italy’s root problems?

According to the last polls published before the blackout period, no single party or coalition is projected to win an outright majority in the Italian general election next Sunday. Given cyclical growth, near-term economic risks seem to be contained, but Italy’s potential growth rate is low, and youth unemployment is among the highest in Europe. […]

Europe chart of the week – Business surveys

There was a broad-based setback in euro area business surveys in February, whether in terms of country or of sector. The Flash composite PMI slipped to 57.5 in February from 58.8 in January. The month-to-month dip was the biggest since 2014. National business surveys painted a similar picture. In Germany, the Ifo business climate index […]

Switzerland: inflation edged lower in January

Headline consumer price index (CPI) inflation eased to 0.7% y-o-y in January from 0.8% y-o-y in December, in line with consensus and our own expectations. Core inflation fell from 0.7% y-o-y in December to 0.5% y-o-y in January. Our inflation outlook remains unchanged. We expect headline inflation to firm up gradually as 2018 progresses, averaging […]

Europe chart of the week – Italian productivity

  With less than 30 days to go, the Italian general election remains highly unpredictable. The new electoral system and the fact that 37% of seats are to be allocated on a ‘first-past-the-post’ system make projecting seats from voting intentions particularly hard. Importantly, Italy is going into this election with an economy that is performing […]

When will the SNB start the process of policy normalisation?

There are several reasons to believe that the SNB may soon start to normalise its monetary policy. First, the Swiss macroeconomic outlook has improved: Swiss growth is picking up and becoming broader-based across a range of sectors, while inflation is also gradually rising. Second, the Swiss franc has weakened and the pressure on the currency […]

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