Swiss National Bank Announces 50 Basis Point Rate Cut

In a strategic move to combat declining inflationary pressures, the Swiss National Bank (SNB) has announced a reduction of its policy rate by 50 basis points (bps) to 0.50%. This adjustment, effective from December 13, reflects the bank's assessment of current economic conditions and forecasts.

Inflation Trends and Economic Projections

The SNB's decision is based on a notable decrease in underlying inflationary pressure. Annual inflation has dropped from 1.1% in August to 0.7% in November, primarily influenced by domestic services. The bank anticipates an average inflation rate of 1.1% for 2024, followed by 0.3% in 2025 and 0.8% in 2026.

Economic Growth and Geopolitical Considerations

The SNB predicts GDP growth to hover around 1% this year and between 1% and 1.5% in 2025. However, the bank acknowledges uncertainties surrounding the future course of economic policy in the US and Europe, exacerbated by ongoing geopolitical tensions.