If necessary, the SNB may also use additional monetary policy measures to influence the exchange rate or the interest rate level. The SNB’s monetary policy strategy sets out how the SNB implements its monetary policy mandate. The first element specifies what the SNB understands by price stability. The second element refers to the conditional inflation forecast as the main indicator for monetary policy and as a central instrument of communication.
Conversely, it would consider a relaxation of policy if inflation showed signs of being too low on a sustained basis. The SNB does not react mechanically to the conditional inflation forecast. Article 99 of the Federal Constitution entrusts the SNB, as an independent central bank, with the conduct of monetary policy in the interests of the country as a whole. The mandate is explained in detail in the National Bank Act (art. 5 para. 1), which requires the SNB to ensure price stability and, in so doing, to take due account of economic developments. The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment.
A hasty restoration of price stability could have adverse effects on the economy and on employment. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
- These uncertainties relate, in part, to the causes and likely duration of the shocks that affect economic performance.
- The conditional inflation forecast serves as the main indicator for the monetary policy decision, but also plays an important role in communicating policy to the public.
- Continue working with your current Relationship Manager or banking center, use the same checks and mobile applications, and log in to the same online services at snb.com.
- SNB strategy is closely aligned with the Saudi Vision programs, levering on its position as the largest institutional and specialized financier in the Kingdom to support the Kingdom’s landmark deals and mega projects.
While we work to unify our products and services, please keep banking at your current banking centers. This change will have no immediate impact on your day-to-day banking. Continue working with your current Relationship Manager or banking center, use the same checks and mobile applications, and log in to the same online services at snb.com. Due to weather conditions, NY banking centers in Orange, Rockland, Ulster, and Sullivan county will open at 10am today. Online Banking, Mobile Banking, ATM’s, and the Contact Center remain available. The SNB holds quarterly monetary policy assessments at which it reviews its monetary policy stance.
For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year. To ensure price stability, the SNB maintains appropriate monetary conditions. In so doing, it seeks to keep the secured short-term Swiss franc money market rates close to the SNB policy rate. The most important secured short-term Swiss franc interest rate is SARON (Swiss Average Rate Overnight).
The SNB conducts Switzerland’s monetary policy as an independent central bank. As noted above, the Swiss National Bank is the central bank of Switzerland. It is an independent body that is bound to and abides by the Swiss Constitution to act in the best economic and financial interests of the country and its citizens. The bank’s main goal is to ensure the stability of prices and monitoring the nation’s economy to allow for growth and development. Here you will find all publications relevant to the monetary policy decisions, sorted by year. After the monetary policy assessment, details of the decision are published in the Quarterly Bulletin, along with further analyses of economic and monetary developments in Switzerland and abroad.
About the SNB
An appreciation of the Swiss franc also curbs inflation and economic activity. The Federal Constitution entrusts the Swiss National Bank, as an independent central bank, with the conduct of monetary policy in the interests of the country as a whole. The SNB is thus tasked with ensuring price stability, while taking due account of economic developments. You can find all the information on its mandate, its monetary policy strategy and instruments as well as on the communication of its monetary policy decisions here. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates.
Inflationary pressures increase when the economy is overheating, and they decrease when production capacity is not fully utilised. The SNB must gradually restore price stability by tightening monetary policy, in the first case, and easing it, in the latter. Consequently, monetary policy that is geared to price stability has a smoothing effect on aggregate demand and thus fosters steady economic growth.
Deflation, i.e. a sustained decrease in the price level, also breaches the objective of price stability. With this definition, the SNB takes into consideration the fact that inflation cannot be steered with pinpoint accuracy, or measured precisely. Measurement problems arise, for example, when the quality of goods and services improves. Such changes are not fully taken into account in the CPI calculation; as a result, measured inflation tends to be slightly overstated. The SNB is thus charged with resolving in the best general interests any conflicts arising between the objective of price stability and business cycle considerations, giving priority to price stability.
Swiss Franc: risks lie to the downside as inflation diverges from SNB forecasts
The third element describes how the SNB implements its monetary policy by influencing the interest rate level and the exchange rate. If forecast inflation indicates a deviation from the range of price stability, an adjustment in monetary policy could prove necessary in the future. Should inflation threaten to exceed 2% on a sustained basis, the SNB would envisage a tightening of its monetary policy.
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The bank has six other representative offices, which are located in Basel, Geneva, Lausanne, Lugano, Lucerne, and St. Gallen. The https://www.fx770.net/ SNB maintains one branch office in Singapore, along with 13 other agencies, which are run by government-owned retail banks.
Understanding the Swiss National Bank (SNB)
It also covers two special events that took place more recently – the stabilisation fund for UBS (2008 to 2013) and the minimum exchange rate against the euro (2011 to 2015). These show that central banks may be required to take exceptional measures in order to fulfil their mandates. The conditional inflation forecast serves as the main indicator for the monetary policy decision, but also plays an important role in communicating policy to the public.
The situation is more complex if price increases are triggered by shocks that increase companies’ costs and cause these companies to reduce production. In such circumstances, monetary policy must, on the one hand, make sure that the higher production costs do not create an inflationary spiral. On the other hand, it must ensure that the companies affected by the increased production costs are not overburdened.
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The possibility of a change in policy is increased by the fact that inflation is running well below the SNB’s 1.9% forecast for 2024. Although there is only two months of data so far, it will have to rise substantially to meet the bank’s forecast before the end of the year. “However, inflation is likely to increase again somewhat in the coming months due to higher electricity prices and rents, as well as the rise in VAT.” The SNB said in its December policy statement. It supplies the Swiss economy with banknotes commensurate with demand for payment purposes. It is also charged by the Confederation with the task of coin distribution. This brochure describes in concise form (approximately thirty pages) the monetary policy approach, other major tasks, and the organisation and legal basis of the Swiss National Bank’s activities.
When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. At , you will find easy-to-understand information about the SNB and its monetary policy, the value of price stability, the history of the minimum exchange rate and much more besides. This website provides easy-to-understand information about the SNB and its monetary policy, the value of price stability, the history of the minimum exchange rate and much more besides.