Monetary policy assessment of 24 September 2020
Central bank: snb | Type: statement | Date: 2020-09-24

Monetary policy assessment of 24 September 2020
The coronavirus pandemic continues to exert a strong influence on economic developments.
The SNB is therefore maintaining its expansionary monetary policy. In so doing, it aims to
cushion the negative impact of the pandemic on economic activity and inflation.
The SNB is keeping the SNB policy rate and interest on sight deposits at the SNB at −0.75%.
In view of the fact that the Swiss franc is still highly valued, the SNB remains willing to
intervene more strongly in the foreign exchange market, while taking the overall exchange
rate situation into consideration. The SNB continues to supply the banking system with
generous amounts of liquidity via the SNB COVID-19 refinancing facility (CRF). It is also
active on the repo market as needed.
The SNB’s expansionary monetary policy is necessary to ensure appropriate monetary
conditions in Switzerland and to stabilise economic activity and price developments. The low
interest rates provide favourable financing conditions and, coupled with the SNB’s
willingness to intervene, counter upward pressure on the Swiss franc. The CRF and the loans
guaranteed by the federal government have together contributed significantly towards
ensuring the supply of credit and liquidity to the economy.
In the current situation, the inflation outlook is subject to unusually high uncertainty. In the
short term, the new conditional inflation forecast is higher than in June, mainly due to a rise in
oil prices. The longer-term inflation forecast is unchanged. However, the forecast for the
current year remains negative (−0.6%). The inflation rate is likely to edge back into positive
territory in 2021 (0.1%) and increase slightly further in 2022 (0.2%). The conditional inflation
forecast is based on the assumption that the SNB policy rate remains at –0.75% over the entire
forecast horizon.
The coronavirus pandemic and the measures implemented to contain it have led to a historic
downturn in the global economy. In the second quarter of 2020, gross domestic product
Zurich, 24 September 2020
Press release
(GDP) was approximately 10–20% below its end-2019 level in most countries.
Unemployment has increased around the world, although short-time work schemes in various
countries have so far prevented a stronger rise.
Following the easing of containment measures by numerous states, there has been a
significant pick-up in economic activity in recent months. The global economy is expected to
experience a robust recovery in the third quarter. Global GDP is nonetheless likely to remain
below its pre-crisis level.
In its baseline scenario for the global economy, the SNB anticipates that it will be possible to
keep the pandemic under control without a renewed serious impairment of economic activity.
The economic recovery should thus continue. The monetary and fiscal policy measures
adopted worldwide are providing important support for the economy. However, it is likely
that global production capacity will be underutilised for some time to come and inflation will
remain modest in most countries.
This baseline scenario is subject to a high degree of uncertainty. On the one hand, a rapid
increase in infections could necessitate renewed containment measures, which would once
again weigh heavily on the economy. Trade tensions could also hamper economic activity. On
the other hand, the economic policy measures introduced in many countries could support the
recovery more strongly than expected.
Switzerland too experienced a sharp recession as a result of the coronavirus pandemic. In the
second quarter, GDP was more than 10% below its pre-crisis level. In contrast to previous
recessions, many service industries in particular were hit hard by the downturn.
Economic activity in Switzerland has picked up significantly since May due to the relaxation
of health policy measures and to fiscal and monetary policy support. This should be reflected
in a strong rise in GDP in the third quarter. The positive development is likely to continue in
However, the SNB anticipates that, as abroad, the recovery will only be partial for the time
being. Production capacity will probably remain underutilised for an extended period of time
and unemployment is likely to increase further.
This year, GDP is set to shrink by around 5%. This would be the strongest decline since the
crisis in the mid-1970s. At its last monetary policy assessment, the SNB had expected an even
stronger decline. The forecast revision is mainly due to the fact that the downturn in the first
half of the year was somewhat less strong than feared. The forecast for Switzerland, as for the
global economy, is subject to high uncertainty.
While GDP declined strongly in the second quarter, mortgage lending and residential property
prices continued to rise. Imbalances thus persist on these markets and continue to present
risks for financial stability.
Zurich, 24 September 2020
Press release