SNB cuts rates by 25 basis points to 1.0%

26th Sep 2024 09:27

(Sharecast News) - The Swiss National Bank cut interest rates on Thursday to 1.0% from 1.25%, in line with expectations.

This marked the third rate cut this year and brought the policy rate down to its lowest level since early 2023.

The SNB said in a statement: "Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter. Among other things, this decrease reflects the appreciation of the Swiss franc over the last three months."

It also indicated that further rate cuts were on the cards soon.

"The SNB's easing of monetary policy today takes the reduction in inflationary pressure into account. Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term," it said.

Inflation in Switzerland was 1.1% in August, down from 1.3% in July and within the central bank's target range of 0% to 2%.

Adrian Prettejohn, Europe economist at Capital Economics, said the SNB's decision to cut its policy rate by 25 basis points shows that it prefers a gradual approach to policy loosening, but the accompanying statement indicates clearly that further cuts are on the way.

"The key sentence is that 'further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term'," he said.

"The decision to use plural (cuts) suggests that there are at least a further 50bp to come, probably in 25bp increments in December and March, to take the policy rate to 0.5%."