SNB expects lower inflation
Published: Thursday, Dec 14th 2023, 10:30
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According to the Swiss National Bank (SNB), price stability is guaranteed at the current key interest rate until well into 2026. The forecast for inflation in 2024 and 2025 has been significantly lowered.
As is well known, the SNB is aiming for inflation of no more than 2%. According to the latest forecast, inflation will rise again to 2.0% in two quarters in 2024 due to higher electricity prices and rents and the increase in VAT. After that, however, it will fall steadily and remain at 1.6% from the second quarter of 2025 until the third quarter of 2026.
The full-year forecasts for 2024 and 2025 are now 1.9% and 1.6%. In September, 2.2 and 1.9 percent were still predicted. As always, the forecast is based on the assumption that the SNB key interest rate will remain at the current level of 1.75% over the entire forecast period.
Among other things, lower inflationary pressure from abroad and slightly lower second-round effects led to the downward revision, according to Thursday's press release.
Weak growth expected
The SNB does not expect any major leaps in economic growth next year. It is forecasting growth in gross domestic product (GDP) of between 0.5 and 1.0 percent. Subdued demand from abroad and tighter financing conditions will have a dampening effect. A further gradual increase in unemployment is therefore to be expected. However, the SNB emphasizes that the GDP forecast is subject to considerable uncertainty.
Meanwhile, the forecast for growth in the current year remains unchanged ("around 1 percent").
©Keystone/SDA
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