Will the Swiss National Bank decrease the SNB policy rate by 25 bps at the December meeting?

This market resolves on the Swiss National Bank's December meeting: whether the SNB cuts its policy rate by 25 basis points. The Yes contract trades near 3%, meaning the market assigns almost no chance to a cut. That looks underpriced: the SNB is already in an easing cycle, and Swiss inflation sits persistently near the lower bound of the 0–2% target range, giving the central bank room to move.

Our 35% estimate rests on several drivers. The franc remains structurally strong, weighing on exporters and importing disinflation. Euro-area growth is weak and the ECB is also cutting, reinforcing pressure on the SNB to move in step. Historically the SNB is comfortable with surprise moves, including between meetings, and often front-runs the market. At 3%, the market effectively rules out a cut even though the underlying macro backdrop favors one.

For Yes to win, we need either weak inflation or growth data before the meeting, or further franc appreciation. The main risks are an energy- or wage-driven inflation uptick and hawkish SNB guidance signaling a pause. If board members' rhetoric turns clearly hawkish, the probability of a cut falls and the position should be closed.