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The global economy in 2025 is marked by diverging trends, with the US showing resilience and growth, while Europe faces stagnation and uncertainty, particularly in the industrial sector. Switzerland's economy is expected to grow moderately at 1.3%, driven by a strong chemical and pharmaceutical industry, despite challenges from a strong franc and weak industrial demand. Political instability and delayed reforms in Europe hinder recovery, raising risks of a downward spiral in industry.
Mortgage interest rates in Switzerland have significantly decreased, with ten-year fixed-rate mortgages averaging 1.56% and two-year rates hitting a low of 1.30%. This decline follows the Swiss National Bank's recent interest rate cut, although further reductions into negative territory are deemed unlikely. Historically, rates have not dipped below 1.00% even during the SNB's ultra-loose monetary policy phase.
The Swiss National Bank (SNB) is lowering the interest factor for sight deposits from 22 to 20, effective February 1, 2025, in response to increased minimum reserve requirements. This adjustment follows a previous reduction from 25 in October and aims to maintain effective monetary policy and support an active money market. Interest on sight deposits up to the limit will continue to be paid at the SNB key rate of 0.50 percent.
US stocks declined following mixed inflation reports and rising jobless claims ahead of the FOMC meeting. The ASX 200 also pulled back as strong labor data diminished expectations for an RBA rate cut. Key economic indicators are set for release next week, including US retail sales and central bank meetings in Australia, Japan, and the UK.
Martin Schlegel, the new President of the Swiss National Bank, made a notable debut at his first media conference, opting for a more open and engaging style compared to his predecessor. He announced a significant interest rate cut of half a percentage point and encouraged direct questions to his fellow Governing Board members, signaling a potential shift towards greater transparency in central bank communication. Schlegel's approach contrasts with the traditionally secretive nature of central banking, hinting at a new era of interaction with the media and the public.
Martin Schlegel, the new Chairman of the Swiss National Bank, announced an unexpected 50 basis point interest rate hike, emphasizing the importance of timely action to avoid future corrections. He reassured that the inflation rate is projected to remain stable, reducing the likelihood of negative interest rates. The Governing Board's communication style has shifted to a more collaborative approach, with all members participating in media interactions.
Martin Schlegel, in his first presentation as Chairman of the Swiss National Bank, announced an unexpected 50 basis point interest rate hike, emphasizing the importance of timely action to avoid future corrections. The Governing Board remains committed to its mandate of price stability, with inflation projected to stay between 0 and 2 percent until Q3 2027. Schlegel's approach marks a shift in communication style, with a more collaborative presentation from the Board members during the media conference.
US stock futures dipped as investors awaited inflation data that could influence the Federal Reserve's interest rate decisions. The Dow and S&P 500 fell about 0.2%, while the Nasdaq 100 dropped nearly 0.3%, impacted by Adobe's disappointing revenue forecast. The upcoming producer price index report is crucial for reassessing rate cut expectations, with a near 99% chance of a quarter-point cut in December.
The Swiss National Bank (SNB) has unexpectedly cut its key interest rate by 50 basis points to 0.5%, responding to low and declining inflation rates. The strong franc is contributing to this trend, and further rate cuts are anticipated, potentially bringing the rate to 0% by the end of 2025. New SNB Chairman Martin Schlegel has not ruled out negative interest rates as the central bank navigates these economic challenges.
The Swiss National Bank has cut its policy rate by 50 basis points to 0.50 percent, marking the fourth consecutive reduction amid decreasing inflationary pressures. Inflation remains low, projected to average 1.1 percent in 2024, while GDP growth is expected to be around 1 percent for the current year. The central bank is also monitoring the Swiss franc's exchange rate, which is favorable for exports.
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