On Thursday, the Swiss National Bank (SNB) reduced its key interest rate by 25 basis points, bringing the main rate down to 0.25%, as the nation contends with low inflation. The rate cut aims to maintain suitable monetary conditions in light of subdued inflationary pressures and increased risks of lower inflation.
The rate cut is a widely anticipated move, with market participants previously estimating a greater than 70% probability of a quarter-point cut.
This follows a larger-than-expected 50-basis-point reduction in December, which was part of a series of interest rate decreases by the SNB starting in March of the previous year, when Switzerland emerged as the first major economy to ease monetary policy.
The decision comes amid data showing Swiss inflation dropped to a nearly four-year low of 0.3% annually in February. The Federal Statistics Office attributed the low inflation rate primarily to the reduced cost of imports.
The Swiss central bank noted that inflation had evolved as expected since their last monetary policy review and expressed commitment to monitoring the economic landscape closely and adjusting monetary policy further if necessary to ensure that inflation remains within a range consistent with medium-term price stability.
