The Swiss National Bank (SNB) has once again reduced its key policy rate by 25 basis points, marking the third consecutive meeting with such a move. The policy rate now stands at 1.0 percent, down from the previous 1.25 percent, aligning with market expectations.
The SNB announced that banks' sight deposits held at the central bank will earn interest at the policy rate up to a specified threshold. Beyond this threshold, deposits will accrue interest at 0.5 percent.
“Further reductions in the SNB policy rate may be necessary in the upcoming quarters to maintain medium-term price stability,” the bank stated.
Inflation is presently being driven by increased costs for domestic services. The bank has revised its inflation forecast, citing factors such as the stronger Swiss franc and reduced prices for oil and electricity, the latter set to decrease in January.
The current inflation forecast for this year has been adjusted to 1.2 percent, slightly down from the previous estimate of 1.3 percent. The projection for 2025 has been revised to 0.6 percent from 1.1 percent, and for 2026, inflation is now expected to be 0.7 percent compared to the earlier estimate of 1.0 percent made in June.
Regarding the economic outlook, the SNB anticipates that economic growth in Switzerland will remain moderate in the coming quarters. This is attributed to the recent appreciation of the Swiss franc and subdued global economic development.
Economic growth for the year is projected to be around 1 percent, consistent with the previous outlook.
