Societe Generale economists expect the Bank of England's Monetary Policy Committee (MPC) to leave rates unchanged in a unanimous vote this week, as the UK faces fallout from Iran-related energy shocks that are pressuring households and economic growth. The government has announced a £50 million support package to counter rising heating oil prices, but Societe Generale notes this is unlikely to materially affect CPI. Fiscal headroom is limited, with £24 billion available against the stability fiscal rule, but this has likely been eroded by £7 billion due to higher Bank Rate and gilt yields. The uncertainty surrounding the persistence of the energy shock means the MPC is expected to drop its easing bias in guidance, with the cost of living remaining a key concern for voters and the government under pressure to prevent large increases in energy bills [1].
Nomura economists anticipate the Swiss National Bank (SNB) will keep its policy rate at 0.00% at its 19 March meeting and for the foreseeable future. Swiss CPI inflation has been low at 0.1% year-on-year for the past three months, staying within the SNB’s target range of 0-2%. Despite resilient GDP growth and rising global energy prices, the appreciation of the Swiss Franc is highlighted as a key downside risk to inflation. The SNB has indicated increased readiness to intervene in the foreign exchange market to counter currency appreciation pressures, rather than resorting to rate cuts. Chairman Schlegel has stated that the threshold for lowering the policy rate below zero is high and that negative inflation readings would not prompt immediate action. Nomura’s central forecast is for the SNB’s policy rate to remain at 0.00% as inflation is expected to accelerate [2].
Both central banks are responding to energy-driven inflation risks and currency pressures by maintaining their current policy rates. The BoE is grappling with limited fiscal space and uncertainty over the energy shock’s persistence, while the SNB is more likely to intervene in FX markets than adjust rates, given the strength of the Swiss Franc and low inflation readings. Market implications include continued caution from both central banks, with no immediate easing expected and a focus on targeted interventions rather than broad policy shifts [1][2].
CONCLUSION
Both the Bank of England and Swiss National Bank are expected to keep rates unchanged amid energy shocks and currency concerns, with targeted interventions favored over broad policy changes. Limited fiscal space and persistent inflation risks are shaping cautious central bank strategies. The market takeaway is a continued wait-and-see approach, with no immediate easing bias and a focus on stability.