By John O’Donnell
FRANKFURT (Reuters) – The current weakness in German industry is sapping demand in Switzerland’s manufacturing sector, Swiss National Bank Chairman Martin Schlegel said on Saturday.
“When Germany has a cold, Switzerland gets the flu,” he said, noting that there was significantly less demand among Swiss manufacturers owing to the downturn in Germany, Switzerland’s top overall trade partner.
Schlegel was speaking at an event in Frankfurt organized by Germany’s Bundesbank less than two weeks before the Swiss central bank is due to make its next interest rate decision.
So far in 2024, the SNB has reduced its benchmark rate three times to 1% now, with expectations of more cuts to come.
Markets currently give a 72% probability for a 25 basis point cut, and a 28% likelihood for a 50 basis point cut at the SNB’s next monetary policy meeting on Dec. 12.
The rate cuts have followed slowing inflation, which has been within the SNB’s 0-2% target range for nearly 18 months.
In October, Swiss annual inflation eased to 0.6%, its lowest level in more than three years.