Swiss National Bank's Interest Rate Outlook

ZURICH (Reuters) – The Swiss National Bank (SNB) is not committed to further interest rate cuts in December, according to Vice Chairman Antoine Martin in an interview published on Monday, despite prior indications of potential reductions to address inflation.

The SNB has already implemented three interest rate cuts this year, and markets anticipate at least a 25 basis points cut from the current 1% level at its upcoming meeting on December 12.

During the last meeting in September, the SNB expressed readiness to cut rates again, with both Martin and Chairman Martin Schlegel mentioning the possibility of lowering rates further, potentially into negative territory.

With Swiss inflation contained at just 0.6% in October, the lowest in over three years, further cuts seem plausible. However, as Martin stated, “nothing is set in stone.” He emphasized that central banks should avoid binding commitments, as future conditions might alter the relevance of their previous statements.

“The SNB has made absolutely no commitment to its future course of action,” Martin reassured, noting that the decision would heavily depend on the circumstances assessed in December.

The low inflation in Switzerland has contributed to the rise of the Swiss franc, which continues to be attractive to investors seeking safe havens amid uncertainties. Martin believes that due to the inflation differential with other countries, the Swiss franc is expected to appreciate in nominal terms over time, although real-term appreciation has been limited.

"The franc's appreciation this year is not particularly surprising or problematic,” he concluded.