The Swiss central bank surprisingly kept its key interest rate at 1.75 percent today. It justified its move on the basis of the effect of monetary tightening in recent quarters, which has been reflected in a moderation of inflation.
Rates unchanged
Switzerland kept the base rate in negative territory for a long time, until last spring the base rate was at -0.75 percent. The so-called rate on sight deposits held by financial institutions with the central bank, which mature at any time, also remained unchanged today and is the same as the base rate, at 1.75 percent.
Analysts in a Reuters poll had expected the central bank to raise the base rate by another quarter percentage point, bringing it to two percent. But money market developments suggested that analysts were far from unanimous in that view.
Stabilization of the inflation rate
The inflation rate in Switzerland was 1.6 percent in August, the same as in July. At the beginning of the year, it was at 3.4 percent.
However, central bankers did not rule out the possibility that rates could rise further in the medium term if circumstances required it to maintain price stability. The central bank kept its estimate of the average inflation rate for this year and next at 2.2 percent, and forecast it to fall to 1.9 percent in 2025. The central bank forecasts gross domestic product (GDP) growth of around 1 percent this year, which is only a marginal change from the previous forecast.
Source Czech Press Office
