The Swiss National Bank lowers its key rate

(Boursier.com) — The Swiss National Bank is the first to come out of the woods! Against all expectations, the SNB has just reduced its key interest rate by 25 basis points, to 1.5%. This is the first rate cut decided by the SNB in ​​nine years.

“The easing of monetary policy is possible because the fight against inflation over the last five half-years has been effective. In fact, inflation has been below 2% for several months again, within the range that the SNB equates price stability with price stability. According to the new forecast, it is expected to remain within this range in the coming years. This decision by the National Bank takes into account the easing of inflationary pressure and the appreciation of the franc in real terms recorded over the past year. Furthermore, it supports growth. The easing therefore helps to ensure that monetary conditions remain appropriate. The SNB will continue to carefully observe the development of inflation and will adapt again if necessary its monetary policy in order to maintain inflation within the range of price stability in the medium term,” explains the SNB.

The SNB’s decision foreshadows possible easing later this year from the Federal Reserve and the European Central Bank, easing upward pressure on the franc and reducing the need for policymakers to resort to potentially to further inflate the Bank’s large balance sheet.