Published by Global Banking & Finance Review®
Posted on January 7, 2025
2 min readLast updated: January 27, 2026
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Swiss inflation decreased to 0.6% in December, raising expectations for more SNB rate cuts. Economists foresee further reductions due to disinflationary pressures.
By John Revill
ZURICH (Reuters) - Swiss inflation fell again in December, according to data on Tuesday, fuelling expectations for more interest rate cuts by the Swiss National Bank this year that markets now view as virtually certain.
Swiss prices rose by 0.6% in December compared with a year earlier, according to figures from the Federal Statistics Office, down from 0.7% in November.
The figure was in line with a consensus forecast in a Reuters poll of analysts and was the fourth month in succession in which annual inflation was below 1%.
Following the data, market expectations for a 25 basis point cut by the SNB in March, from the current 0.5% level, rose to 98.4% from 91% previously.
"Another interest rate cut by the SNB in March is now virtually certain," said GianLuigi Mandruzzato, an economist at EFG Bank.
"The question is just how much - will the SNB go for 50 basis point cut like they did in December or stick with 25 basis points to fend off the risk of too low inflation for too long."
Adrian Prettejohn at Capital Economics also expected another rate cut by the SNB in March, as disinflationary pressures intensify, and would not rule out further cuts.
Month on month, Swiss prices fell by 0.1%, in line with forecasts, as vegetables and international holidays became slightly cheaper.
As a result, Swiss inflation during 2024 averaged 1.1%, well within the SNB's target range of 0% to 2%.
The SNB declined to comment on the latest inflation information.
Although December's reading was unlikely to change the SNB's calculations on its own, another weak reading pointed to more rate cuts by the SNB in 2025 after four cuts in 2024, said Gero Jung, chief economist at Mirabaud, a Swiss bank.
"The SNB is concerned about strong disinflationary risks, bringing the overall inflation rate close to zero, but also the weakness of the eurozone economy, which will affect Switzerland," said Jung, who expects the SNB to cut rates by 25 basis points in both March and June to take its policy rate to 0%.
(Reporting by John Revill; Editing by Alex Richardson)
The main topic is the decline in Swiss inflation and its implications for future interest rate cuts by the Swiss National Bank.
Markets expect a 25 basis point cut by the SNB in March, with further cuts possible due to ongoing disinflationary pressures.
The weakness of the eurozone economy poses risks to Switzerland, influencing SNB's monetary policy decisions.
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