SNB Reduces Deposit Rate to 1.25%, Meeting Expectations

The Swiss National Bank (SNB) board members decided to cut the benchmark Sight Deposit Rate by 25 basis points (bps) from 1.50% to 1.25%, following its quarterly monetary policy assessment on Thursday. This decision aligned with market expectations.

In March, the SNB made a surprise 25 bps rate reduction to 1.50%, becoming the first major central bank to ease its tighter monetary policy.

Summary of the SNB Policy Statement:

• Recent quarters have seen weaker momentum in the mortgage and real estate markets compared to previous years.
• The SNB remains ready to intervene in the foreign exchange market if necessary.
• Overall production capacity utilization was normal.
• Renewed geopolitical tensions could potentially weaken global economic activity.
• The SNB can maintain appropriate monetary conditions and will adjust its policy if needed to ensure inflation remains within the range consistent with medium-term price stability.
• Monetary policy remains restrictive in many countries.
• Inflation in Switzerland is primarily driven by higher prices for domestic services.
• Global economic growth was solid in the first quarter of 2024.
• The economic forecast for Switzerland and globally is subject to significant uncertainty, with developments abroad representing the main risk.
• The SNB projects 2025 inflation at 1.1% (previously 1.2%).
• The SNB forecasts 2024 Swiss growth at around 1% (previously around 1.0%).
• The SNB sees Q1 2027 inflation at 1.0%.
• The SNB projects 2024 inflation at 1.3% (previously 1.4%).
• The SNB forecasts 2026 inflation at 1.0% (previously 1.1%).