BREAKING NEWS: Swiss National Bank Maintains Interest Rates Unchanged

As widely anticipated, the Swiss National Bank (SNB) has opted to keep interest rates steady. 

Key Details:

• Current Interest Rate: 1.75% 
• Forecast: 1.75% 
• Previous: 1.75%

SNB Commentary:

• The SNB affirms its readiness to intervene in the foreign exchange market as deemed necessary. 
• November witnessed a slight dip in Swiss inflation to 1.4%, primarily attributed to reduced inflation in goods and tourism services. However, expectations point to a rebound, driven by increased electricity prices, rising rents, and a VAT hike.

Inflation Projections:

• Projected average annual inflation for 2023: 2.1% 
• 2024: 1.9% 
• 2025: 1.6%
  (Assuming the policy rate remains at 1.75%)

Global Economic Context:

Q3 experienced stronger-than-expected global economic growth, accompanied by a decline in inflation across many nations. Central banks responded by pausing further monetary policy tightening.

Challenges Ahead:

• Despite this, several countries are contemplating a restrictive monetary policy due to persistent inflationary pressures. 
• The global and Swiss economic outlook remains subdued and marked by uncertainties.

Market Reaction:

Following the SNB decision, the Swiss franc exhibits signs of weakening. However, the changes are not deemed significant, with the EURCHF stabilizing around pre-announcement levels shortly after the decision.

Source: xStation 5