In the coming months, further easing of monetary policy can be expected from both the Swiss National Bank (SNB) and the European Central Bank (ECB), though the motives and scale of these actions are determined by different dynamics in inflation, economic growth, and economic and political risks.
The SNB, in response to systematically declining inflation and moderate economic growth, has already decided to cut the policy rate to 0.5%. The primary motivation for this decision stems from a significant drop in inflationary pressures – the consumer price index reached just 0.7% in November 2024, and forecasts suggest further stabilization of inflation at low levels in the coming years (0.3% in 2025 and 0.8% in 2026). Although GDP growth is expected to remain moderate (around 1% in 2024, accelerating to 1–1.5% in 2025), a slight increase in unemployment is also anticipated. The SNB also highlights significant external risks, such as global geopolitical tensions, volatility in U.S. economic policy, and concerns about excessively high inflation in some countries. In this environment, rate cuts aim to maintain price stability and support the economy during a period of uncertainty.
In the coming quarters, the SNB is likely to continue a cautious but flexible policy. Due to very low inflation and moderate growth prospects, further easing measures cannot be ruled out. However, the SNB will remain vigilant regarding any increase in external risks.
In the case of the European Central Bank, the key factor driving decisions on further interest rate cuts is the noticeable decline in price dynamics and moderate economic growth in the eurozone. The ECB plans another step towards easing – most analysts expect a 0.25 percentage point cut in the deposit rate to 3.0%, although some (e.g., JPMorgan Chase) do not rule out a deeper reduction of 0.5 percentage points. This move aims to balance the weakening pace of economic growth (with a forecasted GDP of 0.8% in 2024 and a gradual acceleration to 1.5% by 2026) and stabilize inflation around 2% in the longer term.
Amid rising political tensions in Germany and France and concerns about potential trade conflicts with the United States, the ECB faces a difficult task: supporting the economy through monetary easing while avoiding excessive asset price inflation or exacerbating divergences in bond yields among member states. While some policymakers, such as François Villeroy de Galhau, advocate for more decisive rate cuts, others – like Isabel Schnabel – warn against overly aggressive easing in the face of structural challenges.
The outlook for the coming months thus includes further, gradual rate cuts in the eurozone, careful monitoring of macroeconomic data, and readiness to adjust the course in the event of unforeseen developments. The ECB will strive to maintain a balance between supporting the economy, ensuring price stability, and avoiding destabilizing movements in the bond market.
Both the SNB and ECB are currently focused on easing monetary conditions in response to declining inflation, moderate economic growth, and heightened geopolitical and political uncertainty. Further rate cuts are expected, though their scale and pace will depend on ongoing risk assessments. While the SNB concentrates on stabilizing very low inflation and supporting moderate growth, the ECB faces a different dynamic – with higher inflation in the eurozone, political tensions, and the risk of slower economic growth potentially prompting more decisive action. As a result, both institutions remain flexible and prepared to adjust their policies “meeting by meeting,” emphasizing price stability and sustainable economic growth in a challenging, volatile environment.
Author: Krzysztof Kamiński, Oanda TMS Brokers
Source: [https://ceo.com.pl/snb-i-ebc-na-sciezce-lagodzenia-polityki-inflacja-i-wzrost-gospodarczy-dyktuja-tempo-obnizek-stop-22885](https://ceo.com.pl/snb-i-ebc-na-sciezce-lagodzenia-polityki-inflacja-i-wzrost-gospodarczy-dyktuja-tempo-obnizek-stop-22885)
