- Have respect for all exporters, I know the strong Frank makes situation difficult for them.
- The main problem first was exporters is the lower demand abroad.
- Last week we did not rule out further interest rate cuts.
- Cannot rule out any measures, but nobody likes negative interest rates.
- The SNB cannot rule out negative interest rates. We rule nothing out.
Recall last week, the Swiss National Bank (SNB) cut its key rate by 25 basis points to 1%, as anticipated, due to a significant drop in inflationary pressures.
Inflation in Switzerland fell to 1.1% in August from 1.3% in July, staying within the SNB's target range of 0-2%, but lower than the central bank's earlier expectations. This was largely attributed to weaker-than-expected increases in the prices of imported goods and services following the appreciation of the Swiss franc.
The SNB substantially lowered its inflation forecasts, now predicting an average inflation of 1.3% for 2024, 0.6% for 2025, and 0.7% for 2026—much lower than its June projections. For the first half of 2027, inflation is expected to be 0.6%. The SNB attributed this revision to the appreciation of the franc, falling oil and electricity prices, and reduced second-round effects.
Additionally, the SNB highlighted that downside risks to inflation currently outweigh upside risks, signaling that further rate cuts may be necessary to maintain price stability in the medium term.
For the first time in its rate-cutting cycle, the SNB explicitly stated that additional rate reductions may be required in the coming quarters.