The Swiss National Bank has decided to cut interest rates by another 25 basis points.
The Swiss National Bank has opted for its third rate cut, reducing the cost of money by 25 basis points at its meeting on September 26.
Following the decisions of the ECB and the Federal Reserve, the Swiss central bank has cut its reference rate to 1.00% and left the door open for further interventions in this direction, given the sharp cooling of inflation.
With today’s decision, the SNB has brought the cost of money to the lowest level since the beginning of 2023, as expected by analysts.
The Swiss franc has gained ground against major currencies, boosted by the latest interest rate decision. The US dollar and the euro are down 0.31% and 0.13% respectively against the Swiss currency at the time of writing.
Why the Swiss National Bank Cut Rates to 1%
The Swiss National Bank has taken a third step to ease monetary policy this year, lowering its key interest rate by 25 basis points to 1.0%.
The decision was taken in light of the tameness of inflation in Switzerland, which fell to 1.1% in August and has remained within the central bank’s target range of 0-2% for the past 15 months.
The SNB is ready to cut interest rates again, President Jordan said after the decision, noting that inflationary pressure in Switzerland has significantly eased.
“Further cuts to the SNB’s key rate may be necessary in the coming quarters to ensure price stability in the medium term,” he said. The bank cut its inflation forecasts for 2025 and 2026 and forecast consumer prices to rise by 0.6% in the second quarter of 2027.
A number of analysts said they expected the SNB to cut rates again in December.
The SNB also credited the broader trend of its currency’s appreciation as a factor in the decision.
“Among other things, this decline reflects the appreciation of the Swiss franc over the past three months,” it said in a statement. The currency has gained in recent weeks, hitting a nine-year high against the euro in early August and putting Swiss exporters in a bind.
SNB President Jordan recently highlighted the Swiss central bank’s success in fighting inflation, which has allowed it to become the leading central bank in lowering borrowing costs, cutting rates in both March and June.
He also acknowledged the problems that the recent rise in the franc has created for exporters, reinforcing hopes that lower interest rates, which could weaken the safe-haven currency, could be imminent.
Original article published on Money.it Italy 2024-09-26 12:53:11. Original title: Svizzera, la banca centrale taglia ancora i tassi
