Core Viewpoint - The Swiss National Bank (SNB) decided to maintain the benchmark interest rate at zero for the second consecutive time, aligning with expectations from economists surveyed by Bloomberg [1] Group 1: Monetary Policy Decisions - The SNB's decision to keep the interest rate unchanged reflects a slight decline in inflation over recent months, with the central bank aiming to ensure a gradual rise in inflation over the coming quarters [1] - The SNB has revised its inflation forecasts downward, lowering the 2026 inflation expectation from 0.5% to 0.3% and the 2027 expectation from 0.7% to 0.6% [1] Group 2: Currency and Economic Impact - Following the SNB's announcement, the Swiss Franc continued its upward trend, appreciating by 0.1% against the Euro to 0.9346 and by 0.2% against the US Dollar to 0.7985, reaching its highest level since November 18 [2] - The strong Swiss Franc is a key factor suppressing inflation, as currency appreciation reduces import costs, exerting downward pressure on domestic prices [6] - Recent optimism regarding a trade agreement between Switzerland and the US has catalyzed the Franc's strength, alleviating trade uncertainties and contributing to its appreciation [6] Group 3: Economic Growth and Inflation Outlook - The SNB has adjusted its economic growth forecast for 2025 to "around 1%", a more optimistic outlook compared to the previous prediction of "slightly below 1%" [6] - The inflation rate in Switzerland has remained below market expectations for three consecutive months, with November's inflation rate slowing to zero, contradicting the SNB's earlier predictions of a rebound in inflation this quarter [6] Group 4: Policy Challenges - The SNB faces a challenging policy trade-off between persistent weak price prospects and the structural risks associated with reintroducing negative interest rates, which have previously harmed the pension system, savers' interests, and financial stability [7] - External pressures may arise from the recent 25 basis point rate cut by the Federal Reserve, potentially narrowing interest rate differentials and exacerbating risks of Swiss Franc appreciation and deflation [7] - The recent rise in global bond yields and uncertainties regarding US policy paths may provide the SNB with some leeway in managing cross-border capital flows [7]