SNB lowered its policy rate by 25 basis points to 1.00%, citing that inflationary pressure “has again decreased significantly”, largely driven by the recent appreciation of Swiss Franc. SNB’s statement also indicated that further rate cuts “may become necessary” in the coming quarters to maintain price stability in the medium term.
The revised inflation forecast shows significant downward adjustment compared to June, reflecting factors such as the stronger Swiss franc, lower oil prices, and upcoming electricity price cuts scheduled for January 2025.
The new conditional forecast sees inflation averaging 1.2% in 2024, 0.6% in 2025, and 0.7% in 2026, down from previous estimates of 1.3%, 1.1%, and 1.0%, respectively.
The SNB’s forecast is based on maintaining the policy rate at 1.0% throughout the projection period. The central bank also noted that without today’s rate cut, inflation forecasts would have been even lower.
On the economic growth front, SNB expects “rather modest” performance in the coming quarters due to the recent strengthening of Swiss franc and slower global economic development. It forecasts GDP growth of around 1% for 2024 and 1.5% for 2025.
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