Swiss National Bank's Historic Interest Rate Cut Amid Global Uncertainties

The Swiss National Bank slashed its interest rate by 50 basis points to 0.5%, responding to subdued Swiss inflation and global economic uncertainties. Strengthening the Swiss franc and affecting exporters, this significant reduction marks a shift under new chairman Martin Schlegel, with potential for further adjustments.

The Swiss National Bank made headlines with a historic cut in its interest rate by 50 basis points, a move not seen in nearly a decade. This decision, aimed at countering weaker than expected inflation in Switzerland and rising global economic uncertainties, lowered the policy rate to 0.5%, the lowest since November 2022.

Market reactions were immediate, as the Swiss franc weakened, boosting the euro and dollar, and Swiss stocks experienced a rally. The bold step, the first under new chairman Martin Schlegel, was driven by low inflation rates and signals a potential shift in monetary policy approach.

While the rate cut dampens the Swiss franc's upward pressure, it also brings challenges to Swiss exporters amid subdued demand. As the global economic landscape continues to evolve, the SNB maintains its readiness to intervene, although interest rates remain its primary tool.

(With inputs from agencies.)