The Swiss National Bank (SNB) has announced its decision to keep the SNB policy rate unchanged at 1.75%, despite the significant tightening of monetary policy observed in recent quarters. This move is aimed at counteracting any lingering inflationary pressures while ensuring the nation’s price stability over the medium term. The SNB emphasizes that it will vigilantly monitor inflation’s evolution in the upcoming months and remains prepared to intervene in the foreign exchange market as necessary, with the current focus on selling foreign currency.
Sight deposits held by banks at the SNB will continue to receive remuneration at the SNB policy rate of 1.75% up to a specific threshold. For sight deposits exceeding this threshold, an interest rate of 1.25% will apply, representing a discount of 0.5 percentage points compared to the SNB policy rate.
Inflationary trends have exhibited a downward trajectory in recent months, with the rate standing at 1.6% in August. This decline can be primarily attributed to reduced inflation levels in imported goods and services, reflecting global dynamics.
The SNB’s new conditional inflation forecast is founded on the assumption of a constant SNB policy rate of 1.75% throughout the forecast horizon. Looking ahead, the updated forecast predicts slightly lower inflation levels than those projected in June. This adjustment primarily results from a slowdown in economic activity and a slight reduction in inflationary pressures from abroad. The inflation forecast indicates an average annual inflation rate of 2.2% for 2023 and 2024, with a further decrease to 1.9% in 2025, effectively aligning with the boundaries of price stability at the conclusion of the forecast horizon.
On the global stage, the second quarter of this year witnessed moderate economic growth. Although inflationary pressures have abated in various countries, they continue to surpass predefined targets. Against this backdrop, several central banks have pursued further monetary policy tightening in the past quarter, albeit at a more gradual pace than in previous periods.
The SNB’s decision to maintain its policy rate reflects its commitment to carefully navigating the delicate balance between addressing inflation and sustaining economic growth. This measured approach aims to secure Switzerland’s economic stability while adjusting to evolving global economic dynamics.