Swiss National Bank makes first rate cuts in 9 years

The Swiss National Bank (SNB) has on Thursday cut its main interest rate by 25 basis points, the first-rate reduction made by the SNB in nine years.

This made the SNB the first major central bank to dial back tighter monetary policy to curb inflation.

The Swiss central bank has lowered the SNB policy rate by 0.25 percentage points to 1.5 per cent.

The SNB started the easing cycle after Swiss inflation fell to 1.2 per cent in February, the ninth month in succession that price rises have been within the SNB’s 0-2 per cent target range, which it defines as price stability.

“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% and thus in the range the SNB equates with price stability. According to the new forecast, inflation is also likely to remain in this range over the next few years.” SNB said in a statement.

“With its decision, the SNB is taking into account the reduced inflationary pressure as well as the appreciation of the Swiss franc in real terms over the past year. The policy rate cut also supports economic activity. Today’s easing thus ensures that monetary conditions remain appropriate.”