The Swiss National Bank (SNB) offices ahead of the bank’s rate announcement news conference in Zurich, Switzerland, on Thursday, March 23, 2023.
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The Swiss National Bank on Thursday surprised the market with a decision to lower its main policy rate by 0.25 percentage points to 1.5%, saying national inflation is likely to stay below 2% for the foreseeable future.
Economists polled by Reuters had expected the Swiss central bank to hold rates at 1.75%.
“For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability. According to the new forecast, inflation is also likely to remain in this range over the next few years,” the bank said. Swiss inflation continued to fall in February, hitting 1.2%.
Switzerland is the first advanced economy to cut interest rates following a prolonged period of high inflationary pressures, exacerbated by the Covid-19 pandemic’s impact on global trade and Russia’s war in Ukraine.
The Swiss National Bank’s announcement comes ahead of monetary policy decisions from the Bank of England and Norway’s Norges Bank later on Thursday. On Wednesday, the U.S. Federal Reserve held rates steady following its March meeting and reiterated its expectations for three rate cuts in 2024.
This breaking news story is being updated.