The Swiss National Bank (SNB) reduced its policy rate by 25 basis points to 0.25% in March 2025, hitting the lowest level since September 2022. This action was anticipated, given the prevailing low inflation and economic uncertainties. This reduction marks the fifth adjustment by the central bank in its current cycle. Notably, inflation has fallen from 0.7% in November to 0.3% in February, predominantly due to decreasing electricity prices. However, domestic services continue to contribute to price increases. The SNB maintains a stable inflation outlook, predicting a rate of 0.4% for 2025 and 0.8% for both 2026 and 2027, assuming the policy rate remains at 0.25%.
Switzerland's economy exhibited steady growth towards the end of 2024, bolstered by the services sector and segments of manufacturing, despite a slight rise in unemployment rates. The SNB anticipates GDP growth between 1% and 1.5% in 2025, underpinned by rising real wages and accommodating monetary policies, though sluggish global demand could impact trade negatively. Looking ahead, growth is expected to reach 1.5% in 2026, although uncertainties persist, with geopolitical issues and trade risks presenting potential challenges.
