The Swiss National Bank (SNB) released its monetary policy minutes on March 19, highlighting increased uncertainty in Switzerland's economic outlook due to the ongoing war in the Middle East [1]. While the SNB noted that medium-term inflationary pressures remain virtually unchanged compared to the last assessment, it acknowledged that the outbreak of war has made the Swiss economic outlook for the coming quarters more uncertain [1]. Despite this, the SNB stated that the scenario for global economic developments has not fundamentally changed, and only a slight downturn in sentiment is evident so far [1].
The SNB expects Swiss GDP growth to be around 1% in 2026 and approximately 1.5% in 2027 [1]. In the short term, growth could be subdued before recovering in the medium term [1]. The output gap is currently negative due to a decline in GDP in the third quarter, but it is expected to close in the coming quarters [1]. Unemployment has stabilized and is projected to decline somewhat [1].
Swiss inflation is likely to increase in the short term due to higher energy prices but should remain within a range consistent with price stability, with a medium-term decline anticipated [1]. The SNB governing board noted that the appreciation of the Swiss Franc has resulted in tighter monetary conditions compared to December, and the main risk to the economic and inflation outlook stems from global economic developments [1]. The SNB emphasized its willingness to intervene in the foreign exchange market to counter rapid and excessive appreciation of the Franc, especially given the geopolitical situation and the associated flight to safe havens [1].
The SNB also discussed why Switzerland is less affected by high energy prices than other countries, attributing this to the lower significance of energy for consumption and the manufacturing sector's reduced dependence on energy prices [1]. The conditional inflation forecast assumes the SNB policy rate remains unchanged at 0%, with the forecast remaining within the range of price stability throughout the horizon [1].
CONCLUSION
The SNB minutes underscore heightened uncertainty in Switzerland's economic outlook due to the Middle East conflict, though only a slight downturn in sentiment is observed so far. The SNB maintains its current monetary policy stance, with a readiness to intervene in currency markets if necessary, and expects subdued short-term growth followed by medium-term recovery.