SNB: Vulnerabilities on the mortgage and real estate markets persist

In its monetary policy statement, the Swiss National Bank (SNB) highlights the persistent risks to Switzerland’s real estate sector while noting that more tightening could be on the cards.

Also read: SNB hikes key deposit rate by 50 bps to 1.50%, as widely expected

Key quotes

Does not rule out further interest rate rises.

It cannot be ruled out that additional rises in the snb policy rate will be necessary to ensure price stability over the medium term.

Remains ready to intervene in currency markets.

To provide appropriate monetary conditions, the SNB also remains willing to be active in the foreign exchange market as necessary.

Inflation has risen again since the beginning of the year, and stood at 3.4% in february.

The latest rise in inflation is principally due to higher prices for electricity, tourism services and food.

Stronger second-round effects and the fact that inflationary pressure from abroad has increased again mean that, despite the raising of the snb policy rate, the new forecast is higher through to mid-2025 than in december.

Without today’s policy rate increase, the inflation forecast would be even higher over the medium term.

The growth outlook for the global economy in the coming quarters remains subdued.

In the short-term, the main risks are an economic downturn abroad and adverse effects of the turmoil in the global financial sector.

Over the medium-term inflation should return to more moderate levels, not least thanks to monetary policy and due to the economic slowdown.