Monetary policy assessment of 26 September 2024
Central bank: snb | Type: statement | Date: 2024-09-26

Monetary policy assessment of 26 September 2024
rate to 1.0%
The change applies from tomorrow, 27 September 2024. Banks’ sight deposits held at the
SNB will be remunerated at the SNB policy rate up to a certain threshold, and at 0.5% above
this threshold. The SNB also remains willing to be active in the foreign exchange market as
necessary.
Inflationary pressure in Switzerland has again decreased significantly compared to the
previous quarter. Among other things, this decrease reflects the appreciation of the Swiss
franc over the last three months. The SNB’s easing of monetary policy today takes the
reduction in inflationary pressure into account. Further cuts in the SNB policy rate may
become necessary in the coming quarters to ensure price stability over the medium term.
Inflation in the period since the last monetary policy assessment was lower than expected,
standing at 1.1% in August compared to 1.4% in May. Imported goods and services in
particular contributed to the decline. Overall, inflation in Switzerland is currently being driven
mainly by higher prices for domestic services.
The new conditional inflation forecast is significantly lower than that of June. The stronger
Swiss franc, the lower oil price and electricity price cuts announced for next January have
contributed to the downward revision. The stronger decline in inflation also means that
weaker second-round effects are expected in the medium term. The new forecast is within the
range of price stability over the entire forecast horizon (cf. chart). It puts average annual
inflation at 1.2% for 2024, 0.6% for 2025 and 0.7% for 2026 (cf. table). The forecast is based
on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon. Without
today’s rate cut, the conditional inflation forecast would have been even lower.
Zurich, 26 September 2024
Press release
Global economic growth was moderate in the second quarter of 2024. Inflation in many
countries remains above central banks’ targets. However, it has continued to decline in recent
months. Various central banks have cut their policy rates as a result.
Inflationary pressure abroad is likely to continue to ease gradually over the next quarters. At
the same time, the moderate pace of global growth should continue.
This scenario for the global economy is still subject to significant risks. For example,
geopolitical tensions could increase, resulting in weaker development of global economic
activity. Equally, it cannot be ruled out that inflation will remain elevated for longer in some
countries.
Swiss GDP growth was solid in the second quarter of 2024. Growth momentum in the
chemicals/pharmaceuticals industry was particularly strong, while growth in many other
industries was moderate. There was a further slight increase in unemployment. The utilisation
of overall production capacity was normal.
Growth is likely to remain rather modest in Switzerland in the coming quarters due to the
recent appreciation of the Swiss franc and the moderate development of the global economy.
The SNB anticipates GDP growth of around 1% this year. In this environment,
unemployment should continue to rise slightly, while the utilisation of production capacity is
likely to decline slightly. Over the medium term, the growth-dampening effect of the recent
appreciation should subside and economic development should gradually improve as a result.
The SNB currently expects growth of around 1.5% for 2025.
The forecast for Switzerland, as for the global economy, is subject to significant uncertainty.
Developments abroad represent the main risk.
Momentum on the mortgage and real estate markets in recent quarters has been weaker than
in previous years. While the vulnerabilities in these markets have receded slightly, they still
More detailed information on the monetary policy decision can be found in the
introductory
remarks of the Governing Board.
Zurich, 26 September 2024
Press release