Switzerland Cuts Interest Rates, First Among Major Economies

Switzerland becomes the first major economy to lower interest rates, surprising markets and signaling potential shifts in global monetary policy.
Switzerland Cuts Interest Rates, First Among Major Economies
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Key Takeaways

  • Swiss National Bank surprises with a rate cut to 1.5%.
  • SNB lowers inflation forecasts, projecting modest economic growth.
  • SNB remains ready to intervene in the foreign exchange market if needed.

The Swiss National Bank (SNB) unexpectedly lowered its main policy rate by 0.25 percentage points to 1.5%.

This move came as a surprise to economists, who had anticipated the rate to remain at 1.75%.

Switzerland is the first advanced economy to reduce interest rates after a prolonged period of high inflation.

Implications for Bitcoin

Some speculate that this could hint towards an eventual Fed rate cut.

Bitcoin has traditionally experienced growth in low-rate environments.

Inflation forecasts and economic outlook

The SNB adjusted its inflation forecasts, predicting average inflation to reach 1.4% in 2024 and 1.2% for 2025, both lower than previous estimates.

Swiss economic growth is expected to be modest, with GDP projected to expand by around 1% this year.

The bank also highlighted risks such as weaker global economic activity and vulnerabilities in the mortgage and real estate markets.

Global implications

SNB Chairman Thomas Jordan, in an interview with CNBC, stated that the improved inflation forecast allowed for the rate cut.

He emphasized the bank’s readiness to intervene in the foreign exchange market if necessary to maintain appropriate monetary conditions.

Jordan also mentioned the importance of liquidity for the Swiss banking sector, especially in light of recent banking jitters.

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