The Swiss National Bank surprised the markets on Thursday with an interest rate cut. It is the first major central bank to take this step, considering that the fight against inflation "was effective".
The Swiss National Bank announced an interest rate cut on Thursday, which surprised most analysts. It is the first major central bank to take this step, ahead of the ECB and the US Federal Reserve, and the decision is due to the fact that, in the central bank's assessment, the fight against inflation in recent years "was effective".
The vast majority of analysts following the Swiss National Bank's policy anticipated that, at the monetary policy meeting scheduled for Thursday, the central bank would keep interest rates unchanged, but this expectation was not confirmed. The reference rate (for refinancing operations in the financial sector) was lowered by 25 basis points to 1.50%, and the deposit rate (which remunerates the central bank's liquidity surpluses) was also reduced to 1.50%.
It was the first time in nine years that the Swiss National Bank cut interest rates, and this decision comes after inflation in the country fell to 1.2% in February – the ninth consecutive month of price deceleration, with prices rising well within the central bank's target range of 0% to 2%.
"This monetary policy loosening became possible because the fight against inflation, which marked the last two and a half years, was effective," the central bank said in a statement quoted by Reuters. The interest rate cut will also have the welcome effect of boosting economic activity, according to the central bank.