GKB sees persistent inflation limiting scope for Fed, ECB rate cuts
TLT•GKB warned persistent inflation could limit rate cuts by the Federal Reserve and European Central Bank, while markets increasingly expect rate increases at their December meetings. It expects the Swiss National Bank to hold at 0%, with a possible window for an increase in early 2027.
1. Rate outlook
GKB warned persistent inflation limits the scope for rate cuts despite last week's rate pauses by the Federal Reserve and European Central Bank. Markets increasingly expect both central banks to raise rates at their December policy meetings.
2. Swiss rates
GKB expects the Swiss National Bank to hold its policy rate at 0%, with inflation around 1% and within its target range. A window for an SNB rate increase could open in early 2027, depending on the franc, energy prices and imported inflation.
3. Financing costs
Elevated financing costs leave rate-sensitive sectors vulnerable to setbacks, while resilient economic growth supports corporate earnings.
