FX.co ★ SNB Holds Policy Rate at 0%

The Swiss National Bank decided to maintain its policy interest rate at 0% during its final meeting of the year. It also upheld the 0.25 percentage point charge on sight deposits exceeding a set threshold and confirmed its readiness to intervene in the foreign exchange markets if necessary. Inflation has remained subdued, dropping to 0.0% in November from 0.2% in August, influenced by reduced expenses for hotels, rents, and clothing. The SNB forecasts inflation rates of 0.2% by 2025, 0.3% by 2026, and 0.6% by 2027, presuming the policy rate stays constant. On a global scale, economic growth surpassed projections in the third quarter of 2024, despite ongoing trade tensions. Nevertheless, threats persist due to U.S. tariffs and uncertain trade strategies. Within Switzerland, the GDP declined in the third quarter, majorly impacted by a decrease in pharmaceutical activities following initial U.S. export demands, although other sectors such as manufacturing and services achieved minor gains. The SNB anticipates a GDP growth rate marginally below 1.5% for 2025, tapering to approximately 1% in 2026, with a probable slight increase in unemployment due to restrained economic momentum.