Historic Rate Cut: Swiss Bank's Bold Move to Tame Inflation

The Swiss National Bank slashed its interest rate by 50 basis points, a decade-high cut, to counter low inflation and the rising Swiss franc. This surprise move, led by Chairman Martin Schlegel, aims to maintain price stability against global rate cuts, impacting Swiss exporters and economic forecasts.

The Swiss National Bank executed a significant monetary policy shift by cutting its interest rate by 50 basis points on Thursday. This move is the largest in almost a decade as the SNB seeks to pre-emptively tackle anticipated global rate reductions and curb the strengthening Swiss franc.

The action took the policy rate down to 0.5%, marking the lowest level since November 2022. This decision exceeded market expectations, as a majority of economists surveyed anticipated a smaller reduction. Following the decision, the Swiss franc weakened, leading to gains in the euro and dollar, and a rally in Swiss stocks.

Leading the new direction, SNB Chairman Martin Schlegel emphasized the aim to counter declining inflationary pressure. He assured ongoing vigilance over economic conditions and further adjustments to meet the bank's price stability objectives. The rate cut, during Schlegel's first major decision since assuming office, is propelled by consistent low inflation trends and continues to shape market expectations for future rates.

(With inputs from agencies.)