The Swiss National Bank (SNB) is leaving the key interest rate at 1.75 percent. After five consecutive interest rate increases, the Swiss National Bank is no longer touching the key interest rate. But it is still too early to give the all-clear.
The SNB reports that the monetary policy, which has been significantly tightened in recent quarters, is counteracting the inflationary pressure that is still present. However, she does not rule out the possibility that further interest rate increases may be necessary. The SNB will therefore closely monitor the development of inflation in the coming months.
Assessments by SRF business editor Denise Joder
Open box Close box
«The National Bank is acting cautiously. It has come to the conclusion that the interest rate increases to date are sufficient for the time being to counteract the inflationary pressure. When making its decision, the National Bank had to weigh up whether an interest rate increase was still possible or whether it would slow down the economy too much because loans would then become more expensive for companies and private individuals. Apparently she has come to the conclusion that a further interest rate increase is currently not necessary.
In June 2022, the SNB tightened the interest rate screw slightly for the first time in 15 years by half a percentage point, followed by four further interest rate increases by June 2023. Inflation in Switzerland has fallen slightly since the SNB’s last monetary policy assessment in June. Most recently, at 1.6 percent, it was back within the SNB target range of 0 to 2 percent.
The most important central banks abroad have recently made different decisions. While the US Federal Reserve extended its interest rate pause, the European Central Bank raised its key interest rates to 4.5 percent last week.
The focus remains on price stability
There is a certain uncertainty about how much the previous tightening of monetary policy will further weaken inflation, said SNB President Thomas Jordan at the press conference. The latest decision takes these uncertainties into account. “Our focus remains firmly on ensuring price stability,” emphasized the SNB boss. “We will not hesitate to further tighten our monetary policy if necessary to keep inflation sustainably below 2 percent,” he said.
The SNB assumes that inflation in Switzerland will only decline slowly after the interest rate break announced today. Only from 2025 will it be sustainably below the 2 percent threshold. Specifically, the SNB expects an inflation rate of just 1.7 percent for the current third quarter, as it announced on Thursday when assessing the monetary policy situation. This decline is primarily due to lower inflation for imported goods and services.