Higher inflation shows the SNB has further to go

We now think that the SNB policy rate will peak at 1.75% this year, rather than 1.25%. Core inflation has risen for the last four months in succession and we think the SNB will be more hawkish than we previously anticipated. We have also nudged up our 2023 inflation forecast for Switzerland due to the strong underlying inflationary pressures. Next week we expect to learn that Sweden’s core inflation rate fell slightly in January.