Monetary Policy Outlook December 2024
Martin Schlegel starts as the new SNB President with a clear signal: a 50 basis point cut in the key interest rate. The franc has reacted to this, but the strength of the currency is unlikely to be broken in the long term. Should the pressure on the franc continue despite lower interest rates, the SNB may be forced to initiate systematic foreign exchange market interventions. In theory, it would first have to lower interest rates further towards the effective lower bound. This raises the question of whether today’s interest rate move will remain a one-off intervention or whether the SNB will maintain its pace and cut the key rate to 0% as early as March.
