Swiss National Bank cuts rates in surprise move
By Abigail Townsend
Date: Thursday 21 Mar 2024
(Sharecast News) - The Swiss National Bank surprised markets on Thursday after it trimmed interest rates for the first time in nearly a decade.
The central bank reduced its headline rate by 25 basis points to 1.5%, after inflation fell to 1.2% in February, its lowest level for well over two years.
Most analysts had expected it to leave rates unchanged at 1.75%.
However, the bank said: "The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective.
"For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability."
The SNB's surprise move - the first time it has cut rates in nine years - saw the Swiss franc fall to an eight-month low against the euro. It also fall sharply against the US dollar.
The SNB is the first major central bank to cut rates in the current cycle, in direct contrast to the more cautious approach adopted by the European Central Bank, Bank of England and Federal Reserve.
The BoE is due to announce its latest monetary policy decision later on Thursday, and is widely expected to leave rates at 5.25%.
Neil Wilson, chief market analyst at Markets.com, said: "We are entering a multi-speed exit from tightening phase of the cycle and central banks are starting to need to think for themselves again and take things in the direction that best suits their economy.
"The SNB is in a rush to cut; the Fed seems to be prepared to sequence it neatly, despite inflation running at 4%; and the BoE will see inflation down to 2% this quarter but is not seen cutting until later this year."
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