SNB Lowers Interest Rates Again; Marks Third Consecutive Reduction

The Swiss National Bank (SNB) has reduced its key interest rate by 25 basis points to 1.0%, marking its third consecutive cut. This decision was anticipated as the inflation rate in Switzerland dropped to 1.1% last month, the lowest among G10 nations and within the SNB’s target range of 0%-2%.

Recent business surveys have indicated a slowdown in economic activity over the summer, with a slight increase in unemployment since the first half of 2023. A poll conducted revealed that 30 out of 32 economists predicted a 25 basis point reduction, with only one expecting a larger cut of 50 basis points and another forecasting that rates would remain unchanged.

In March, the SNB implemented an unexpected quarter-point reduction, its first in nine years. The subsequent rate cuts have positioned the SNB at the leading edge of a global trend where central banks are lowering rates after a period of tighter policies aimed at controlling inflation.

Last week, the Federal Reserve announced a significant half-point cut, while the European Central Bank has also reduced rates twice in the past three months.