In a surprising decision, the Swiss National Bank (SNB) on Thursday cut official interest rates by 0.25 percentage points to 1.5 percent. This is reported by CNBC.
Switzerland is the first major economy to slightly reduce its official interest rates after a long period of high inflation. The move went against the expectations of many economists, who expected the central bank to maintain the previous rate of 1.75 percent, according to a Reuters poll.
SNB: Swiss inflation remains permanently below two percent
The SNB announced that it expects Swiss inflation to remain below two percent for the foreseeable future. The central bank literally announced: “Inflation has been below 2 percent again for several months and is therefore in the range that the SNB equates with price stability.” Swiss inflation was 1.2 percent in February
According to the report, the SNB also reduced its annual inflation forecasts. The central bank now expects average inflation to reach 1.4 percent in 2024, up from its estimate of 1.9 percent in December. The SNB now expects 1.2 percent by 2025 (previous estimate: 1.6 percent).
According to CNBC, Capital Economics analysts expect the SNB to cut two more interest rates in 2024. Swiss stocks rose following the SNB's interest rate move.
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SIX Swiss stock indices
The US Federal Reserve could raise interest rates three times this year
On Wednesday night, Jerome Powell, head of the US Federal Reserve, announced three key interest rate cuts for the United States this year. This gave the stock markets a significant boost. Both the Dow Jones Industrial and the Nasdaq 100 reached new record levels.
For the eurozone, ECB President Christine Lagarde recently mentioned June as a possible time for the first key interest rate cuts.