Swiss National Bank expected to cut interest rates

The Swiss central bank is due to announce its interest rate policy on Thursday Keystone Archive

The coming week will see attention increasingly focused on an expected quarter point cut in interest rates by the Swiss National Bank (SNB). Speculation has been mounting that the central bank will cut its target range on Thursday.

Despite economic growth for the first quarter of 2001 coming in at the top end of economists’ expectations, increasing 2.5 per cent on an annualised basis, most pundits still expect an easing in monetary policy to offset a predicted slowdown in economic growth as the year progresses.

The Swiss government’s economic advisory panel said it now expected Gross Domestic Product growth for 2001 to be two per cent, down from its forecast of 2.25 per cent, made in December.

“With these figures there is a good chance that the Swiss National Bank will consider a cut in interest rates,” said Hanspeter Hausheer, senior economist at UBS Warburg.

The SNB is due to unveil its interest rate policy on Thursday. After a quarter point cut on March 22, the SNB is currently targeting the middle of a range of 2.75 to 3.75 per cent for its benchmark rate.

Away from the economic front, Swiss hearing aid manufacturer, Phonak, is set to reveal its final numbers for 2000/2001 on Thursday.

In April, the company revealed a 46 per cent increase in sales over the year to SFr460 million ($267.6 million). It also forecast a 20 per cent improvement in earnings before interest and tax.

It’s been a busy year for Phonak, which has acquired Unitron of Canada, Spain’s Indo Laem, Denmark’s Auris and Austria’s Hansatron.

Last year net profit was SFr34 million, with operating profit at SFr47.65 million.

The annual general meeting (AGM) season continues on Tuesday with Bon Appetit’s shareholders due to come face to face with management.

Investors in the food retail group should be pleased with the company’s performance after the company revealed a 6.2 per cent increase in first quarter sales at SFr753.4 million ($441.9 million).

Switzerland’s largest life insurer, Swiss Life/Rentenanstalt will be holding its annual general meeting on Friday. The company, which is due to drop the Rentenanstalt part of its name from next year, might face some serious questions from shareholders.

It warned in April that net profit for 2001 would be less than the SFr924 million ($541 million) seen in 2000, but numbers would still be higher than the 1999 net profit of SFr447 million.

by Tom O’Brien