Swiss central bank cuts interest rates, 1st advanced economy to do so

It is the first advanced economy to cut interest rates following a prolonged period of high inflation.

Inflation has declined further since the beginning of the year, and stood at 1.2 per cent in February. This decrease was attributable to lower goods inflation.

“The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective. For some months now, inflation has been back below 2 per cent and thus in the range the SNB equates with price stability,” the central bank said in a statement.

According to the new forecast, inflation is also likely to remain in this range over the next few years.

The central bank now sees average inflation reaching 1.4 per cent this year, down from its 1.9-per cent projection in December, and 1.2 per cent for next year, reduced from the previous 1.6-per cent estimate. Its first forecast for 2026 puts average inflation at 1.1 per cent over the period.

The country’s economic growth is “likely to remain modest in the coming quarters,” with the GDP poised to expand by roughly 1 per cent this year, SNB said.

Banks’ sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold, and at 1 per cent above this threshold.

Global economic growth is likely to remain moderate in the coming quarters, SNB added.

Fibre2Fashion News Desk (DS)