The Swiss National Bank lowered interest rates on Thursday for the first time since June 2022, becoming the first major central bank to take this action. The bank stated that its efforts in combating inflation have been successful.
The SNB made its monetary policy more lenient and reduced its rate by 0.25 percentage points to 1.5 percent, which will come into effect from Friday. This marks the first reduction since June 2022.
While the US Federal Reserve kept its rates unchanged on Wednesday, the SNB altered its monetary policy for the first time since the rapid tightening that began in 2022.
The central bank explained in a statement that it was able to ease its monetary policy because the fight against inflation over the past two and a half years has been effective.
The SNB noted that inflation has been below two percent for several months, which aligns with the range considered by the bank to indicate price stability.
According to the SNB's projections, inflation is expected to continue to remain within this range in the coming years.
The SNB stated that its decision considers the reduced inflationary pressure and the appreciation of the Swiss franc in real terms over the past year.
The rate cut also aims to support economic activity and maintain appropriate monetary conditions.
The SNB announced that it would closely monitor inflation and make further adjustments to its monetary policy if necessary to keep inflation within the range it deems consistent with price stability.
Since the start of the year, inflation has further decreased and stood at 1.2 percent in February.
The central bank attributed this decrease to lower goods inflation, stating that the current inflation is mainly driven by higher prices for domestic services.
Few economists anticipated the SNB's decision to lower its key rate, providing a boost to industries affected by the strength of the Swiss franc.
According to a survey by the Swiss agency AWP, out of nine economists, seven anticipated the SNB to maintain its key rate, while two expected it to reduce it to 1.5 percent.
Swiss industry has faced a decline in orders not only due to concerns about the global economy, but also due to interest rates that have led to increased investment costs.
Exporting companies are also negatively impacted by the strength of the Swiss franc, which remains at a high level compared to the euro and the US dollar, despite having slightly decreased since December.
AFP