Breaking: SNB unexpectedly cuts Deposit Rate by 25 bps to 1.50%

Momentum on the mortgage and real estate markets has weakened noticeably in recent quarters. However, the vulnerabilities in these markets remain.

The weak demand from abroad and the appreciation of the Swissfranc in real terms over the past year are having a dampening effect.

In this environment, unemployment is likely to continue to rise gradually, and the utilization of production capacity is likely to decline somewhat further.

Banks’ sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold, and at 1.0% above this threshold.

This scenario for the global economy is still subject to significant risks. Inflation could remain elevated for longer in some countries, necessitating a tighter monetary policy there than expected in the baseline scenario.

The SNB also remains willing to be active in the foreign exchange market as necessary.

The new conditional inflation forecast is significantly lower than that of December.

The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective.

In theshort term, this is above all due to the fact that price momentum in the case of some categoriesof goods has slowed more quickly than had been expected in December .

According to the new forecast, inflation is also likely to remain in this range over the next few years.

Global economic growth is likely to remain moderate in the coming quarters.

The weak demand from abroad and the appreciation of the swiss franc in real terms over the past year are having a dampening effect.

Inflation is currently being drivenabove all by higher prices for domestic services.

Our forecast for switzerland, as for the global economy, is subject to significant uncertainty.