The SNB created a surprise on Thursday by reducing its key rate by half a percentage point to bring it down to 0.50%, in the face of a sluggish economy.
The Swiss national bank, however, maintained its forecasts for the country’s economic growth, at 1% in 2024 and 1.5% in 2025, estimating that it “should recover somewhat next year, but only weakly due to the moderate economic situation abroad,” she said in a press release.
“Uncertainty regarding the economic outlook has increased in recent months,” the BNS argued in the press release, particularly regarding “the future direction of economic policy in the United States.”
“Political uncertainty has also increased in Europe. In addition, geopolitical tensions could weaken the global economy,” she added.
The Swiss monetary institution, on the other hand, lowered its inflation forecasts for 2024 and 2025 but raised it slightly for 2026.
It now expects it to be 1.1% in 2024 (compared to 1.2% during its previous quarterly meeting in September), 0.3% in 2025 (compared to 0.6% previously) and 0.8% in 2026 ( compared to 0.7% previously).
The SNB also remains prepared “to be active if necessary on the foreign exchange market”, she specifies.
In our country, inflation has been below 2% since June 2023, which allowed the SNB to start easing its monetary policy before the European Central Bank and the American Federal Reserve. In March 2024, it reduced its key rate by 0.25%, then made two cuts of the same magnitude in June and September.
Inflation in November stood at 0.7% year-on-year, and many economists expect it to fall further with the expected drop in electricity prices in January.
The strength of the Swiss franc had given a boost to the SNB in its efforts to reduce inflation, by easing pressure on imported products. But this appreciation of the Swiss franc also had an unfavorable effect for Swiss companies since it increased their export costs.
The rise of the franc against the euro weighs particularly on companies in industry, a sector already facing a drop in orders from Germany.
In the third quarter, economic growth in Switzerland slowed to 0.2%, compared to 0.4% in the second quarter, according to figures from the Ministry of the Economy.
