Swiss National Bank decreases rates in December

Latest bank decision: At its meeting on 12 December, the Swiss National Bank (SNB) decided to lower the policy rate by 0.50 percentage points to 0.50%, taking total rate cuts this year to 125 basis points.

Monetary policy drivers: The key domestic factors influencing the SNB's decision were moderate economic activity, weak headline and core inflation—both have tracked below 1.0% in recent months—as well as the Bank’s lower inflation expectations for next year.

Policy outlook: The SNB stated its willingness to adjust its monetary policy as necessary to ensure inflation remains in line with the target of being positive but below 2.0%. Our panelists expect interest rates to be cut to around 0% in 2025 in the face of limp price pressures, with one panelist seeing a return to the negative rates observed in the pre–COVID era.

Panelist insight: On the outlook, Goldman Sachs’ analysts said: “Despite the removal of the explicit easing bias from the written statement, we see today's decision and communication, indicating concerns on inflation outlook and the FX developments, as consistent with the SNB delivering more easing next year. We continue to expect two additional 25bp cuts in 2025H1 to a terminal rate of 0%, as we see a potentially sizeable hit to activity in the pipeline and further appreciation pressure on the franc.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Swiss interest rate projections for the next ten years from a panel of 4 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Swiss interest rate.

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