The Swiss National Bank (SNB) has unexpectedly slashed its main policy rate by 0.25 percentage points to 1.5%, marking a departure from expectations. This decision was prompted by persistently low inflation, with national figures forecasted to remain below 2%.
Analysts predict further rate cuts throughout the year, with economic growth expected to be modest. SNB Chairman Thomas Jordan, who will step down in September, emphasised the importance of liquidity in the banking sector.
Switzerland’s move contrasts with Norway and the UK, which maintained their rates, while the U.S. The Federal Reserve signalled a potential series of rate cuts in 2024.
1. The Swiss National Bank surprises markets with a 0.25 percentage point cut in its main policy rate, reducing it to 1.5%.
2. Lowering rates is attributed to persistently low inflation, which has remained below the 2% target.
3. Economists had anticipated the SNB to maintain rates at 1.75%, underscoring the unexpected nature of the decision.
4. The SNB revises its inflation forecasts downward, projecting average inflation of 1.4% in 2024 and 1.2% in 2025.
5. Analysts foresee additional rate cuts in 2024, with expectations of two more reductions by the end of the year.
6. SNB Chairman Thomas Jordan, set to step down in September, emphasises the importance of liquidity in the banking sector.
7. Switzerland’s decision contrasts with Norway and the UK, which maintained their rates, while the U.S. Federal Reserve hinted at potential rate cuts.
8. The European Central Bank remains cautious, signalling a potential rate cut in June contingent on data.
