Monetary policy: Swiss National Bank cuts interest rates – Economy

The Swiss National Bank (SNB) surprisingly announces a turnaround in interest rates. On Thursday, it unexpectedly became the first major central bank to lower its rate Key interest rate by 0.25 percent to 1.5 percent, raising hopes that other central banks could soon follow suit.

Jerome Powell, the head of the US Federal Reserve, announced on Wednesday that interest rates would be cut soon. Although he did not commit to a specific date, his statements were interpreted to mean that three interest rate cuts of 0.25 percent each could be imminent this year. The key interest rate in the USA is currently in a range of 5.25 to 5.5 percent. “Inflation has fallen significantly while the job market has remained strong, and that is very good news,” Powell said.

Also at the European Central Bank (ECB) there are increasing indications that an interest rate cut is imminent in June. The British central bank, however, said on Thursday that it was sticking to its tight line for the time being in view of stubbornly high inflation in the country.

In Switzerland the inflation rate has been lower than two percent again for several months; 1.4 percent inflation is forecast for 2024. This is the level that the ECB and Fed are also targeting as the highest limit for inflation. “The SNB is the first central bank to declare victory over inflation,” said Karsten Junius, chief economist at Bank J.Safra Sarasin.