Rate increases lower Swiss inflation expectations, paper finds

Analyzing 48,575 responses from the Swiss Consumer Sentiment Survey between January 2023 and July 2025, authors Alexander Goetz, Lucas Kyriacou, Florence Miguet Heimlicher, and Stefanie Siegrist examined ten Swiss National Bank announcements comprising two rate increases, two holds, and six rate cuts.

Following rate increases or hold decisions, households lowered their one-year inflation expectations by an average of 0.49 percentage points within three days.

In contrast, policy rate cuts produced an offsetting coefficient of 0.39 percentage points, rendering the net effect statistically indistinguishable from zero.

The response was concentrated in short-term expectations, whereas five-year expectations showed weaker and less consistent revisions across the event window.

Demographic and linguistic factors heavily condition the transmission of central bank news.

The aggregate reduction in inflation expectations is driven almost entirely by German-speaking households and individuals with tertiary education, who reduced short-term expectations by 1.0 percentage point.

French- and Italian-speaking respondents showed no significant response.

Furthermore, anticipated policy changes lowered expectations as intended, whereas unexpected decisions, such as the surprise March 2024 rate cut, served primarily as information signals about macroeconomic conditions.