The yield on Switzerland’s 10-year government bond edged up to 0.21%, after touching near three-month lows of 0.20% on February 27. The move came as investors grew increasingly concerned that the ongoing conflict in the Middle East could lead to prolonged disruptions in global energy supplies, fueling inflation and prompting markets to pare back expectations for imminent central bank rate cuts.
Domestically, investors still expect the Swiss National Bank (SNB) to maintain its accommodative policy stance in the near term. Inflation in Switzerland remained at 0.1% year-on-year in January, unchanged from December and anchored at the lower bound of the SNB’s 0%–2% price-stability target range. SNB President Martin Schlegel has recently reiterated that inflation is likely to pick up in the coming months.
Meanwhile, the Swiss economy returned to modest growth in the fourth quarter, with GDP expanding by 0.2%.
