Swiss National Bank Decrease in Interest Rate Came As A Surprise to the Market

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On Thursday, the Swiss National Bank (SNB) announced a reduction in its key interest rate, a move that caught many by surprise and positioned Switzerland as the first major financial center to implement such a cut in recent times.

Thomas Jordan, the departing chairman of the SNB, attributed the decision to the central bank’s successful efforts in curbing inflation within the affluent Alpine nation.

Effective immediately from Friday, the rate will be lowered by a quarter of a percentage point to 1.5%. (Credits: Getty Images)

Effective immediately from Friday, the rate will be lowered by a quarter of a percentage point to 1.5%.

Explaining the rationale behind the timing of the rate adjustment, Jordan highlighted the effectiveness of the SNB’s inflation-fighting measures over the past two and a half years.

“The easing of our monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective,” Thomas Jordan stated.

“For some months now, inflation has been back below 2%, and thus in the range we equate with price stability. According to our new forecast, inflation is also likely to remain in this range over the next few years.”

 

The unexpected move had an immediate impact on the Swiss franc, causing it to depreciate against the euro.

 

On Thursday, the franc was trading at 1.02 euros, down from 1.03 euros the previous day. Notably, in January, the Swiss currency had reached historic highs against the euro.

Nate O'Hara
Nate O'Hara
Nathan is a seasoned commerce writer with a passion for unraveling the intricacies of the business world and distilling them into engaging narratives. During his academic journey, he delved deep into subjects like economics, marketing, and entrepreneurship, honing his analytical skills and developing a keen understanding of market dynamics.

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