SNB lowers Sight Deposit Rate by 25 bps to 1.0%, as expected

The Swiss National Bank (SNB) announced on Thursday that it lowered the benchmark Sight Deposit Rate by 25 basis points (bps) from 1.25% to 1.00% after concluding its quarterly monetary policy assessment.

The decision aligned with the market expectations. 

The SNB has cut the key rate by 50 bps so far this year, emerging as the first major central bank to implement a dovish policy pivot.

Summary of the SNB policy statement

Prepared to intervene on the FX market as necessary.

SNB sees 2024 Swiss growth at around 1.0% (previous forecast was for around 1%).

SNB sees 2025 Swiss growth at around 1.5% (previous forecast was for 1.5%).

SNB sees 2024 inflation at 1.2% (previous forecast was for 1.3%).

SNB sees 2025 inflation at 0.6% (previous forecast was for 1.1%).

SNB sees 2026 inflation at 0.7% (previous forecast was for 1.0%).

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Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter.

Decrease reflects the appreciation of the swiss franc over the last three months.

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Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.

Momentum on the mortgage and real estate markets in recent quarters has been weaker than in previous years.

Inflation in switzerland is currently being driven mainly by higher prices for domestic services.

Inflation in many countries remains above central banks’ targets.

Growth momentum in the chemicals/pharmaceuticals industry was particularly strong, while growth in many other industries was moderate.

Market reaction to the SNB interest rate decision

In an initial reaction to the expected SNB rate cut decision, the USD/CHF pair tumbled nearly 60 pips to test 0.8460 before recovering to near 0.8480, where it now wavers. The pair is down 0.22% on the day.

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