The easing cycle has been kicked off

Macroeconomic update for April 2024

While investors were assessing the timing of the first interest-rate cuts by the world’s major central banks, the Swiss National Bank (SNB) forged ahead with a surprise cut of 25 basis points in March, beating its peers to the punch and kicking off the easing cycle. Inflation in Switzerland has stayed below 2 percent for some months now – in the range that the SNB equates with price stability. The Swiss franc moved almost immediately, and we expect the currency to continue to weaken in the coming months.

Looking across the Atlantic to the world’s biggest economy, the US Federal Reserve signalled its willing to reduce rates to head off a job-cutting spiral – even if that means slightly higher inflation for a while. Unemployment rates have a tendency to rise quickly once they do start inching up.

Gold prices have been standing out lately amid strong demand from central banks and Chinese consumers.

Key Takeaways

1. Swiss central bank gets the ball rolling on rate cuts
   The Swiss franc is poised to continue to weaken in the coming months as weaker inflation allows Switzerland’s central bank to accommodate the economy further.
2. Fed keeps an eye on US job market and inflation
   The Fed is holding off on lowering rates until it has clearly won the fight against inflation, though a sudden downturn in the labor market might also prompt a cut.
3. Remarkable gold price
   Strong demand from central banks and Chinese consumers seeking to diversify as well as the prospect of rate cuts boost gold.

Even the smallest undertaking starts with a conversation

Other topics that might interest you