{"id":5079,"date":"2024-03-22T07:00:31","date_gmt":"2024-03-22T05:00:31","guid":{"rendered":"https:\/\/ch.jfdi.cc\/?p=5079"},"modified":"2024-03-22T07:00:31","modified_gmt":"2024-03-22T05:00:31","slug":"swiss-central-bank-cuts-rates-in-surprise-move-getting-ahead-of-global-peers","status":"publish","type":"post","link":"https:\/\/ch.jfdi.cc\/?p=5079","title":{"rendered":"Swiss central bank cuts rates in surprise move, getting ahead of global peers"},"content":{"rendered":"
The Swiss National Bank cut its main interest rate by 25 basis points to 1.50 per cent on Thursday<\/strong>, a surprise move which made it the first major central bank to dial back tighter monetary policy aimed at tackling inflation.<\/p>\n
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The central bank, in the first rate decision since long-serving Chairman Thomas Jordan said he would step down in September, also cut its interest rate on sight deposits to 1.50 per cent.The SNB\u2019s decision, its first rate cut in nine years, kicked off a busy day for central banks in Europe, with the Bank of England and Norwegian central bank also announcing their latest policy decisions. The Norges Bank kept its rates on hold and economists also expect no change from the Bank of England.The SNB move wrong-footed markets, sending the Swiss franc to an eight-month low against the euro and Swiss government bond yields tumbling, while boosting Zurich-listed shares.A majority of analysts polled by Reuters had expected the usually conservative SNB to keep rates on hold at 1.75 per cent and wait at least another three months before moving.\u201cSNB is the first central bank to declare victory over inflation,\u201d said Karsten Junius, chief economist at J.Safra Sarasin, who had expected a rate cut.The step follows a drop in Swiss inflation to 1.2 per cent in February, the ninth month in succession that price rises have been within the SNB\u2019s 0-2 per cent target range.\u201cThe easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective,\u201d Jordan told reporters, noting how Swiss inflation has held below 2 per cent for several months.\u201cAccording to our new forecast, inflation is also likely to remain in this range over the next few years.\u201dThe SNB said it was taking into account the reduced inflationary pressure as well as the appreciation of the Swiss franc in real terms over the past year. The cut would support economic activity, it added.Before the decision, Swiss industry had urged the central bank to broaden its focus from fighting inflation to help them deal with the strong franc, which was eating into profits.Philipp Burckhardt, Fixed Income Strategist and Portfolio Manager at Lombard Odier IM, said Thursday\u2019s move was a logical consequence of current conditions and signalled more cuts ahead.\u201cThis is also an ideal farewell gift from Thomas Jordan, who can now clearly set the direction for his successor,\u201d he said.ECB, FED<\/strong>Asked what was it like for the SNB to go first with policy easing, Jordan said: \u201cFor us, it\u2019s not a question of whether we\u2019re the first or last, we make the decision at the moment when we\u2019re convinced that it\u2019s a good time to make that decision.\u201dHe also rejected the notion the cut was a parting gift, and declined to be drawn into discussing whether there would be any further rate moves this year.\u201cWe give no forward guidance regarding our future interest rate decisions, but it\u2019s clear we will look at the inflation forecast in three months,\u201d he told a press conference. \u201cIf necessary, we will adjust monetary policy at that time.\u201dThe European Central Bank is expected to make its first reduction in borrowing costs in June after it kept its interest rates on hold earlier this month.The US Federal Reserve on Wednesday left its benchmark interest rate unchanged but retained its outlook for three cuts this year.Not all central banks are moving in the same direction.On Tuesday, the Bank of Japan ended eight years of negative interest rates with its first interest rate hike in 17 years and on Thursday central banks in Taiwan and Turkey surprised markets by raising rates, citing inflation concerns.Economists said the SNB\u2019s rate cut was a bold move given the central bank\u2019s usual caution.\u201cThe SNB\u2019s decision is a surprise, but was always a possibility because of the low inflation in Switzerland,\u201d said UBS economist Alessandro Bee.\u201cIt\u2019s a brave move to go before the ECB and Fed, although the SNB will not see it that way, and they probably believe the other central banks will also cut rates later this year.\u201dIn its updated economic projections, the SNB dialled down its inflation forecasts, expecting it to average 1.4 per cent in 2024, down from its December prediction for a rate of 1.9 per cent.Inflation is expected to finish next year at 1.2 per cent, down from 1.6 per cent previously forecast.<\/div>\n","protected":false},"excerpt":{"rendered":"

The Swiss National Bank cut its main interest rate by 25 basis points to 1.50 per cent and also reduced its interest rate on sight deposits to the same percentage. This decision marked the first rate cut in nine years and was unexpected by many, leading to a decrease in the value of the Swiss franc and a drop in Swiss government bond yields. The move was in response to a drop in Swiss inflation to 1.2 per cent in February, maintaining within the SNB’s target range of 0-2 per cent for nine consecutive months. The SNB’s action reflects its assessment that the fight against inflation over the past two and a half years has been effective, with expectations that inflation will remain within the target range in the coming years. This decision came before the chairman, Thomas Jordan, is set to step down in September.<\/p>\n","protected":false},"author":3,"featured_media":5080,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[1902,47,48,611,1056,2402,1240,2577,2542,2511,3,1992,612,50,599,201,51,2515,52,988,250,415,2294,1991,67,2977,1190,899,374,2975,1401,2042,185,34,375,550,605,1358,2707,2976,177,380],"class_list":["post-5079","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-other","tag-bank","tag-bank-of-england","tag-bank-of-japan","tag-banks","tag-borrowing-costs","tag-caution","tag-clear","tag-concerns","tag-conference","tag-costs","tag-cyprus","tag-decrease","tag-deposits","tag-ecb","tag-euro","tag-europe","tag-european-central-bank","tag-february","tag-federal-reserve","tag-fight","tag-google","tag-government","tag-income","tag-industry","tag-inflation","tag-inflation-targeting","tag-inflationary-pressure","tag-interest","tag-interest-rate","tag-interest-rate-cut","tag-interest-rates","tag-japan","tag-main","tag-markets","tag-rate-cut","tag-rate-hike","tag-succession","tag-support","tag-surprise-move","tag-swiss-national-bank","tag-turkey","tag-us"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\nSwiss 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