The Swiss National Bank cut interest rates by 50 basis points on Thursday, its largest cut in nearly a decade, in an effort to stay ahead of expected cuts by other central banks and limit the rise of the Swiss franc.
The Swiss National Bank cut interest rates from 1.0% to 0.5%, the lowest level since November 2022.
More than 85% of economists polled by Reuters expected a smaller cut of 25 basis points, although markets expected a cut of 50 points.
The cut was the steepest drop in borrowing costs since the Swiss National Bank cut emergency interest rates in January 2015 when it suddenly abandoned its minimum exchange rate with the euro.
“Underlying inflation pressure fell again this quarter. Today’s easing of monetary policy takes this development into account,” the Swiss National Bank said.
“The Swiss National Bank will continue to monitor the situation closely, and will adjust its monetary policy if necessary to ensure that inflation remains within a range consistent with price stability in the medium term.”
Thursday’s decision was the first under new Swiss National Bank President Martin Schlegel, and marked an acceleration of the policy of his predecessor Thomas Jordan, who oversaw three 25 basis point cuts this year.
This was made possible by weak Swiss inflation, which reached 0.7% in November, and has been within the Swiss National Bank’s 0-2% target range, which it calls price stability, since May 2023.
