(VOR News) – The Swiss National Bank made it clear that it wanted to cut interest rates in March. It did, however, add that the nation’s exports and economy might continue to be vulnerable to geopolitical events in its neighbours.
The Swiss National Bank lowered its base rate 25 basis points to 0.25% on Thursday.
In an era of low inflation and economic uncertainty, the decline was in line with market expectations. Additionally, this is the first time the bank has lowered its interest rate since it was abruptly lowered by fifty basis points in December of last year.
Inflation in Switzerland decreased from 0.7% in November 2024 to 0.3% in February of this year. The main cause of this decline was a drop in the price of electricity. Even while domestic service fees had increased, they only made up a modest percentage of the total loss.
Inflation has over 0.4% so far this year, and the Swiss National Bank projects that it will average over 0.8% in 2027 and 2028. We anticipate that the policy rate will stay at 0.25% in this scenario.
In a news release, the financial institution said, “With today’s rate adjustment, the SNB is ensuring that monetary conditions remain appropriate, given the low inflationary pressure and heightened downside risks to inflation.”
“The Swiss National Bank is ensuring that monetary conditions remain appropriate.” To guarantee that inflation stays within the range that is consistent with price stability, the State National Bank (SNB) must keep an eye on the situation throughout the medium term and make any monetary policy adjustments that may be required.
The healthcare giants Nestlé and Roche, which both had 0.5% and 0.2% increases, respectively, were the main drivers of Thursday morning’s 0.2% advance in Swiss stocks on the SIX Swiss National Bank Exchange.
Both of these businesses had high hopes for the future. The shares of the international pharmaceutical behemoth Novartis increased by 0.6% on the SIX Swiss Exchange Thursday morning. Novartis is a multinational pharmaceutical company.
Switzerland’s economic growth will slow by 2025, Swiss National Bank.
The Swiss State Secretariat for Economic Affairs (SECO) updated its prior optimistic forecast for the nation’s economic prospects in light of recent events.
According to a news statement issued earlier this week by the Swiss Economic and Social Council (SECO), “The Federal Government Expert Group on Business Cycles has slightly lowered its growth forecast for the Swiss economy.”
It is anticipated that GDP will increase by 1.4% in 2025 and 1.6% in 2026 after the addition of sporting events. The Swiss economy will continue to grow more slowly than usual during the next two years if this scenario comes to pass.
Switzerland’s GDP has grown 1.8% per year since its foundation.
Even though the SECO claims that “uncertainty surrounding international economic and trade policy and their macroeconomic consequences remains exceptionally high,” its most current estimate is predicated on the non-escalation of the global trade war.
Experts caution that Switzerland’s exports and domestic growth will be severely hampered when the trade situation deteriorates and global economic activity declines. This is due to a decrease in international economic activity.
On the other side, the Swiss economy and the production of commodities exported from Switzerland would both greatly benefit from a more favourable economic climate, which would be made possible by Germany’s recently agreed-upon substantial fiscal package.
Furthermore, accounting for the influence of international athletic events, the Swiss National Bank economy is expected to increase at a rate of 1.4% in 2025, according to global consulting firm Roland Berger.
It is anticipated that consumer spending will have increased and investment will have paid for itself by 2025. The most likely source of this outcome is a decline in both interest rates and inflation.
Increased geopolitical instability and the push towards protectionism, on the other hand, are predicted to cause the Swiss National Bank franc to appreciate more, which the company claims could restrain export growth.
Roland Berger also thinks Switzerland’s economy will keep growing faster than the average growth rate of the eurozone. It is impossible to overstate the ramifications of this, particularly in light of the fact that major countries like France and Germany are predicted to lag further this year.
SOURCE: EN
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