Swiss National Bank Cuts Policy Rate by 50 Basis Points, Surpassing Expectations

Forex - The Swiss National Bank (SNB) made a move that exceeded market expectations by reducing the policy rate by 50 basis points. According to the SNB's announcement, the policy rate was lowered from 1.00% to 0.50%. Analysts had expected the SNB to continue with a 25 basis point rate cut. The rate change will take effect from December 13, 2024. The announcement indicated that the Bank is ready to be active in the foreign exchange market if necessary.

It was noted in the statement that GDP growth in the country is expected to be quite modest in the third quarter of 2024. The announcement stated, "Growth in the service sector was somewhat stronger again, while value added in manufacturing decreased. There was a slight increase in unemployment, and employment growth was only weak. Overall capacity utilization was normal."

The SNB projected GDP growth for this year to be around 1%. Additionally, due to the easing of monetary policy in recent quarters and moderate global economic activity, a slight recovery in growth is expected next year. The SNB currently expects growth between 1% and 1.5% for 2025. The statement noted, "In this environment, while unemployment is likely to continue to rise slightly, capacity utilization may decrease a bit."

It was highlighted that the forecast for Switzerland is subject to significant uncertainties, similar to those affecting the global economy, with developments abroad representing the main risk.