The Swiss National Bank (SNB) reduced its policy rate by 0.25% this Thursday, stating that its ongoing battle against inflation over the last two and half years has been successful. The revision of the policy rate came as a surprise to the market, with a reduction to 1.5% while they were expecting it to remain steady.
The SNB announced that it stands ready to partake in foreign exchange market activities whenever required. This reduction in the policy rate is meant to bolster economic activity and the SNB reassures that it's accommodating the necessary monetary conditions.
The bank stressed the need to keep a close watch over inflation trends. Furthermore, it promises to adjust its monetary policy again if needed to keep inflation within a range that assures price stability in mid-term.
Consequently, the SNB revised its inflation forecast downwards for 2024, now expecting it to be at 1.4% instead of the earlier predicted 1.9%. Similarly, for the year 2025, the projection was adjusted to 1.2% from the previous 1.6%. For the year 2026, inflation is forecasted to be at 1.1%.
In addition, the central bank predicted an annual economic growth of roughly 1% for the current year.
