Interest statement issued by the Swiss National Bank - December 2024.

The Swiss National Bank decided on Thursday morning to reduce interest rates by 50 basis points, bringing the main interest rate down to 0.5%, from 1.00%. The key points included in the monetary policy statement issued by the bank are:

Swiss National Bank's Interest Rate Cut:

• The Swiss National Bank cut interest rates by 0.5 percentage points to 0.5% (effective from December 13, 2024).
• Demand deposits with the Swiss National Bank will earn interest up to a certain limit, with a rate of 0% above that limit.
• The Swiss National Bank remains ready to intervene in foreign exchange markets if necessary.

Overview of Inflation:

• Core inflation pressure decreased in the last quarter.
• Inflation fell from 1.1% in August to 0.7% in November.
• Domestic services continue to drive inflation in Switzerland.

Short-term Inflation Forecast:

• New forecasts show lower-than-expected inflation, especially for oil and food products.
• Medium-term inflation expectations remain stable, with the average annual inflation forecast at:
  • 1.1% for 2024
  • 0.3% for 2025
  • 0.8% for 2026

Global Economic Outlook:

• Global growth was moderate in the third quarter of 2024; core inflation remains high in many countries.
• Central banks worldwide have lowered interest rates in response to easing inflation.
• Core inflation abroad is expected to gradually decline.
• Global growth rate is expected to remain moderate.

Uncertainty Factors:

• Increased uncertainty due to U.S. economic policy and political instability in Europe.
• Geopolitical tensions may impact global economic growth.
• Risk of higher-than-expected inflation in some countries.

Performance of the Swiss Economy:

• Modest GDP growth in the third quarter of 2024, with strength in the services sector, but contraction in manufacturing.
• Slight increase in unemployment and weak employment growth.
• The utilization of production capacity remains normal.

Growth and Unemployment Forecasts:

• The Swiss National Bank expects GDP growth of 1% in 2024, with a slight recovery in 2025 (growth of 1% to 1.5%).
• Unemployment is expected to rise slightly, with a slight decrease in capacity utilization.

Uncertainty in Forecasts:

• Swiss and global economic forecasts are subject to a significant degree of uncertainty, especially regarding external developments.