Swiss rate decision in focus this week, Hungary macro calendar almost empty


Two rate decisions will be in focus this week in Hungary, especially the one in Switzerland.

The Swiss National Bank (SNB) is expected to hike rates to 2.00% despite low inflation readings and the consensus of analysts is that another tightening to 2.50% is to come next year. The US Fed's Open Market Committee will hold a rate-setting meeting on Tuesday, but analysts do not expect a rate move. Regarding local macro news, Hungary's calendar is nearly empty this week. Consumer price changes in November will be released by the Central Statistics Office (KSH) on Tuesday, with a minor increase from the previous month in sight. The Government Debt Management Agency (ÁKK) will issue its financing plan for 2007 on Thursday.

After the expected 25 basis points rate hike by the European Central Bank (ECB) to 3.50% last Thursday, euro-outs Swiss, Sweden and Norway will this week follow suit and also hike rates by 25 basis points to 2.00%, 3.00% and 3.50% respectively,” Henrik Gullberg of Calyon has commented on Monday. „All three Banks will at least leave the door open for further rate hikes, but we believe there is most potential for bullishness in Norway,” he said.
„In Switzerland and Sweden the case for a more aggressive stance is much less urgent due to the continuation of low actual inflation. In Switzerland there is the added argument for cautiousness relating to the deceleration in the much looked at KOF leading indicator.
However, we believe the recent development in the German IFO survey is a harbinger of renewed strength in the KOF over the next couple of weeks and combined with the gradual slowdown in the US economy. The solid Swiss fiscal and external balances this should generate a gradual strengthening in the Swiss franks. Any signal from the SNB that it is committed to further rate hikes would be Swiss frank supportive,” Gullberg added. (


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