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%.
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.
“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.
