News conference
Embargo
14 December 2023,
10.00 am
Introductory remarks by the Governing Board
Thomas Jordan, Martin Schlegel and Thomas Moser
Chairman of the Governing Board / Vice Chairman of the Governing Board /
Alternate Member of the Governing Board
Swiss National Bank
Berne, 14 December 2023
© Swiss National Bank
Ladies and gentlemen
As Chairman of the Governing Board, it is my pleasure to welcome you to the news
conference of the Swiss National Bank. I would also like to welcome all those who are
joining us today online. After our introductory remarks, we will take questions from
journalists as usual. Questions can also be asked by telephone.
Monetary policy decision
I will begin with our monetary policy decision. We have decided to leave the SNB policy rate
unchanged at 1.75%. Banks' sight deposits held at the SNB are remunerated at the SNB
policy rate up to a certain threshold, and at 1.25% above this threshold. We are also willing to
be active in the foreign exchange market as necessary.
Inflationary pressure has decreased slightly over the past quarter. However, uncertainty
remains high. We will therefore continue to monitor the development of inflation closely. We
will adjust our monetary policy if necessary to ensure inflation remains within the range
consistent with price stability over the medium term.
Inflation forecast
Allow me to address the development of inflation. Inflation stood at 1.4% in November, and
was thus somewhat lower than in the previous months. The slight decrease was above all
attributable to lower inflation on goods and tourism services. However, inflation is likely to
increase again somewhat in the coming months due to higher electricity prices and rents, as
well as the rise in VAT.
Our new conditional inflation forecast is below that of September. In the short term, this is
due to the recent lower-than-expected inflation. In the medium term, reduced inflationary
pressure from abroad and somewhat weaker second-round effects are resulting in a downward
revision. Over the entire forecast horizon, the inflation forecast is within the range of price
stability (cf. chart). The forecast puts average annual inflation at 2.1% for 2023, 1.9% for
2024 and 1.6% for 2025 (cf. table). Our forecast is based on the assumption that the SNB
policy rate is 1.75% over the entire forecast horizon.
Global economic outlook
Let me now turn to the global economic outlook. Global economic growth was stronger than
expected in the third quarter of this year. However, developments varied greatly between the
individual economic areas. While the US economy showed robust growth, momentum in
Europe remained weak.
Inflation has declined significantly in most countries in recent months. Against this backdrop,
many central banks have refrained from further monetary policy tightening. With inflation
still above the respective targets, monetary policy is likely to remain restrictive in many
countries for the time being.
The growth outlook for the global economy in the coming quarters remains subdued, in
particular due to the tightening of monetary policy in recent quarters and less expansionary
fiscal policy. Inflationary pressure is likely to continue to ease.
Our scenario for the global economy is still subject to large risks. Inflation could remain
elevated for longer in some countries, necessitating a further tightening of monetary policy
there. Equally, the energy situation in Europe could deteriorate over the course of the winter,
and geopolitical tensions could increase. It therefore cannot be ruled out that global growth
momentum will weaken more significantly than assumed.
Swiss economic outlook
How does the economic situation look in Switzerland at the moment? GDP growth was
moderate in the third quarter of this year. The services sector expanded again, albeit not as
dynamically as in the previous quarters. By contrast, value added in manufacturing stagnated.
This was above all attributable to the subdued momentum in the manufacturing sector
globally, but especially in Germany. Unemployment rose somewhat, and the utilisation of
overall production capacity was only slightly above average.
Growth is likely to be weak in the coming quarters. Subdued demand from abroad and the
tighter financing conditions are having a dampening effect. Overall, Switzerland's GDP is
likely to grow by around 1% this year. For 2024, we currently expect growth of between 0.5%
and 1%. In this environment, unemployment is likely to continue to rise gradually, and the
utilisation of production capacity should decline somewhat further.
Our forecast for Switzerland, as for the global economy, is subject to high uncertainty. The
main risk is a more pronounced economic slowdown abroad.
Monetary policy outlook
Ladies and gentlemen, allow me to return to our monetary policy.
Since June 2022, we have raised the SNB policy rate by a total of 2.5 percentage points, and
the Swiss franc has appreciated significantly since mid-2021. This tightening of monetary
conditions was necessary to bring inflation back within the price stability range.
Inflation has been below 2% again since June this year. At 1.4% in November it was even
lower than we had expected in September. Inflation is likely to increase again somewhat in
the coming months. Nevertheless, underlying inflationary pressure has continued to decrease
slightly compared with September, and our conditional inflation forecast is now within the
price stability range over the entire forecast horizon for the first time in some time.
We have decided today to leave the SNB policy rate unchanged. At the same time, we are no
longer focusing on foreign currency sales. This reflects that monetary conditions are currently
appropriate.
However, uncertainty about the development of inflation going forward remains high. On the
one hand, there are still upside risks, although these have abated somewhat of late. For
example, there could still be second-round effects in many domestic goods and services. On
the other hand, there are also downside risks with regard to inflation. It could, for example,
decrease more strongly than expected in the wake of the economic slowdown. At present, our
assessment is that the upside and downside risks for inflation are approximately balanced.
Against this backdrop, we will monitor the ongoing development of inflation closely. If
necessary we will adjust our monetary policy and in this context we are also prepared to be
active in the foreign exchange market. Our goal remains to keep inflation within the range
consistent with price stability on a sustainable basis over the medium term.
Ladies and gentlemen, thank you for your attention. I will now hand over to Martin Schlegel.
Ensuring the supply and distribution of cash
I would like to inform you today about the SNB's current efforts in the area of cash.
According to our payment methods survey, more than 95% of the population would like to
retain the option of using cash as a means of payment in the future. Consumers want to be
able to choose whether to pay with cash or electronic payment methods. It is true that this
freedom of choice is largely a given nowadays. However it is not to be taken for granted,
especially when less and less is paid for with cash.
In order to retain cash as a payment method in the future, it must remain readily accessible,
e.g. from ATMs, and it must be widely accepted in retail trade. Cash accessibility, use and
acceptance are interrelated - if access declines, then so too does its use and thus also its
acceptance in retail. As a result, the use of cash decreases further, and a downward spiral
ensues. Indeed, the use of cash, the number of ATMs and the acceptance of cash in retail have
declined in recent years.
With a view to gaining a range of perspectives on these developments, the SNB and the
Federal Finance Administration held a first roundtable on cash at the end of October. Banks,
retailers, cash-in-transit operators, public transport companies as well as trade and consumer
associations took part in this exchange. The participants are in agreement - any threat of a
downward spiral within the cash system should be countered at an early stage.
The supply and distribution of cash is one of the SNB's core tasks. We are currently
assembling a broad-based group of experts. The aim of this group is to identify challenges to
cash distribution and to develop solutions. In particular, it is necessary to maintain access to
cash so that, in turn, both consumer use and acceptance by companies remain unrestricted.
In conclusion, let me emphasise the following point. The freedom of choice between cash and
electronic payment methods is not only dependent on the SNB - it is the responsibility of all
stakeholders. To preserve this freedom of choice, it is important that shops and businesses
accept cash, banks and the post office dispense cash, and consumers actively use cash.
Ladies and gentlemen, thank you for your attention. I will now hand over to Thomas Moser.
The new generation of the central Swiss payment system
On 17 November, the Swiss National Bank and SIC Ltd successfully launched SIC5. This
new generation of the central Swiss payment system changes the way payments can be
processed thanks to the introduction of instant payments. In the future, private individuals and
companies will be able to execute electronic payments end-to-end, from one account to
another, within seconds - around the clock and including on weekends and public holidays.
Financial institutions will now connect to the system and start offering this functionality to
their customers, at the latest from August 2024 onwards.
Until now, cash has been the only payment method with which customers could effect an
immediate and final transfer of value. Thanks to instant payments, this may now also be
achieved with electronic transfers. Both private individuals and companies stand to benefit
from this. The advantages include the immediate availability of funds received, and thus
greater scope for process automation, as well as simplified liquidity management and lower
settlement risk.
The launch of SIC5 is an important milestone in the development of Switzerland's payments
landscape. It was made possible thanks to a close cooperation between the SNB, SIC Ltd and
financial institutions, and reflects the commitment of these parties to a future-proof Swiss
payments infrastructure. The SNB is convinced that instant payments will become the new
standard in electronic payments.
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