In contrast to September's announcement, the SNB's December Monetary Policy Assessment (MPA) contained few surprises. The policy rate was again left at the 1.75 percent level to which it was raised back in June, matching widely held market expectations. In addition, there was little discussion of the exchange rate except a predictable reiteration of September's promise to be active in the FX markets as necessary. However, the bank did indicate that it would no longer focus on foreign currency sales reflecting the view that the current stance of policy is thought to be appropriate. It may also indicate concerns about boosting an already very strong Swiss franc.

The updated economic forecasts underpin today's decision. Immediately ahead, inflation could increase due to higher electricity prices and rents, as well as a 0.4 percentage point hike (to 8.1 percent) in the standard VAT rate. Even so, conditional on a policy rate of 1.75 percent, prices are now seen rising by less than expected in September across the entire projection horizon. Indeed, the 2025 prediction is just 1.6 percent, some 0.3 percentage points short of the previous call and at the bottom end of the central bank's price stability target. In itself, this suggests that the current policy stance is probably too tight.

In terms of the real economy, the SNB still sees GDP expanding 1.0 percent this year but acknowledges that upcoming quarters are likely to be relatively soft. Consequently, growth is put at just 0.5 percent to 1.0 percent in 2024, pointing to a rise in unemployment and a further fall in capacity utilisation. The main risk to the economic outlook is thought to be a more pronounced slowdown overseas.

Today's decision will leave financial markets contemplating when the first cut in the policy rate will be delivered next year. Assuming that inflation continues to behave itself, March would seem a good bet especially if the likes of the Fed and ECB have already reduced their rates or look poised to do so. Too cautious a pace of easing by the SNB could add unwanted upside pressure on the Swiss franc.

With inflation steady and low and with the Swiss franc strong, the SNB is expected to keep policy unchanged at its December meeting.

The Swiss National Bank (SNB) usually announces any changes to its monetary stance at its quarterly Monetary Policy Assessment. However, adjustments can be made at any time. Since 2000 monetary policy has consisted of the following three elements: a definition of price stability, a medium-term inflation forecast and a target range for a reference interest rate, the three-month Swiss franc Libor (London Interbank Offered Rate). The SNB attempts to secure an annual inflation rate as specified by the consumer price index (CPI) of less than 2 percent. In recent times this has involved sizeable intervention in the foreign exchange market to prevent appreciation of the Swiss franc although since January 2015 there has been no explicit exchange rate target.

The aim of the SNB's monetary policy is to ensure price stability in the medium and long term. By keeping prices stable (2 percent annual inflation rate), the SNB seeks to create an environment in which the economy can fully exploit its production potential. The Bank is required to set its policy to meet the needs of the Swiss economy as a whole rather than the interests of individual regions or industries.

The SNB has traditionally implemented its monetary policy by fixing a target range of 1.0 percentage points at the level deemed appropriate for the three-month Swiss franc Libor. The Bank has then normally sought to hold the rate around the middle of that corridor. However, as a result of strong capital inflows into the local currency prompted by the 2008/09 global downturn, this objective range has been both narrowed and reduced to just 0.0 - 0.25 percent, with a point target of 0.0 percent. In fact, since September 2011 the thrust of policy has been determined largely by the SNB's expressed aim of preventing the CHF strengthening beneath a CHF1.20 floor versus the euro.

The Swiss National Bank publishes its monetary policy assessments on a quarterly basis in March, June, September and December. In these reports it describes the current monetary environment and formulates its monetary policy intentions for the following quarter. It also provides inflation forecasts which help financial markets to formulate of where monetary policy might be headed. Twice a year -- in June and in December -- the Bank holds a media conference. At that time, the Governing Board provides information about the economic situation and comments on its monetary policy.