The Swiss National Bank is not touching the key interest rate of 1.75 percent and is taking a break. The main reason: inflation has fallen. SRF business editor Sven Zaugg answers the most important answers to the most pressing questions.
Sven Zaugg
Business editor
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Sven Zaugg has been working as a business editor for Radio SRF since 2023. He previously worked as a reporter and business editor for SonntagsBlick.
Why is the National Bank leaving the key interest rate at 1.75 percent?
National Bank President Thomas Jordan explains the halt in interest rates by saying that inflation pressure has decreased “slightly” over the last few quarters. Looking at Switzerland, inflation was 1.4 percent and thus within the SNB target range of between 0 and 2 percent. Even if you take into account the rent increase – the mortgage reference interest rate rose at the beginning of December – inflation has continued to fall. Looking abroad, consumer prices in the euro area and the USA have also cooled noticeably. In addition, the interest rate environment has changed significantly since the last monetary policy assessment in September. In Europe and the USA, increases in key interest rates are largely off the table.
Will the key interest rate fall again?
Most likely. The most important economists in Switzerland expect inflation to rise by around one percent next year. This would give the SNB the opportunity to lower the key interest rate again. When exactly this will be the case is still unclear. Some market observers are already expecting an interest rate cut in the next monetary policy assessment in March. Others, however, do not expect lower interest rates until June or September. Either way: higher interest rates should not be an issue in 2024. The National Bank sees the forecast inflation in 2024 at 1.9 percent.
What does the decision mean for savers?
The interest rates on savings accounts are unlikely to change any time soon. The last year and a half has shown that banks are reluctant to pass on higher interest rates. For comparison: Since May 2022, the key interest rate has risen by 2.5 percentage points, but the banks, for their part, have only raised the interest rate on savings deposits by an average of 0.3 percent, according to National Bank statistics. Regardless of this, the willingness of savers to switch to a bank with more attractive interest rates is apparently not particularly strong, as surveys have shown. Many customers say that the administrative effort involved in switching banks is too great for them.
What are the consequences for tenants?
When it comes to rents, there have already been two increases in the mortgage reference interest rate at relatively short intervals – most recently at the beginning of December. This has unpleasant consequences for some tenants: rents are rising. This is the bad news. The good news is: Because the key interest rate could fall next year, the reference interest rate will also shrink in step. Tenants should therefore pay close attention to whether the landlord adjusts the interest rate accordingly. A look at the rental agreement provides information about the interest rate at which the current rent is calculated.