(Bloomberg) -- Switzerland’s government slashed its forecast for consumer prices, supporting expectations that the central bank’s out-sized interest-rate cut last week won’t be enough to stop them subsiding.
Inflation will come in at 1.1% this year, 0.3% in 2025 and 0.7% in 2026, the State Secretariat for Economic Affairs said Tuesday. That’s down from prior projections of 1.2% for this year and 0.7% for next.
At its meeting last week, the Swiss National Bank reduced its key rate by a half point, while also significantly lowering its predictions for consumer prices. They match those of the agency known as SECO, apart from its forecast for 2026 inflation, which is slightly higher.
Officials there who are responsible for drawing up the government’s predictions expect the economy to recover next year. After an expansion of 0.9% in 2024, momentum is seen picking up to 1.5% next year, lower than the 1.6% previously seen.
In 2026, output will grow by 1.7%, according to the forecast. The growth projections are adjusted to account for international sports events, whose large revenues tend to skew Switzerland’s gross domestic product.
“Export-oriented sectors sensitive to cyclical and exchange-rate fluctuations are facing a slowdown,” SECO said in a statement. “Industrial production capacities are currently underutilized and order books are weak, factors that are likely to continue to dampen investment activity in the near term.”
©2024 Bloomberg L.P.