The Swiss National Bank (SNB) announced a 25 basis point cut to its key interest rate on Thursday, bringing it down to 0.25%. This decision was largely anticipated by traders who had previously priced in a more than 70% chance of such a reduction. The move aligns with the SNB's ongoing strategy to address the persistent low inflation affecting Switzerland's economy.
Switzerland has been experiencing depressed inflation, with the annual inflation rate falling to 0.3% in February, its lowest in nearly four years. The SNB's decision to further loosen monetary policy marks the fourth interest rate cut since March of last year, when Switzerland became the first major economy to initiate such measures.
The SNB's rate adjustment is part of an effort to maintain appropriate monetary conditions amidst low inflationary pressures. The central bank noted that inflation had developed as expected since its last monetary policy assessment.
The previous rate cut, which occurred in December, saw a reduction of 50 basis points. The current decision is consistent with the SNB's strategy to support the economy while managing inflation risks.
"With today's rate adjustment, the SNB is ensuring that monetary conditions remain appropriate, given the low inflationary pressure and the heightened downside risks to inflation," stated the Swiss National Bank.
The SNB emphasized the importance of maintaining inflation within a range consistent with price stability over the medium term. This approach is crucial for sustaining economic growth and stability in Switzerland.