Chairman of Swiss National Bank (SNB BNS) Thomas Jordan (C) gestures next to Vice Chairman Martin Schlegel (L) and board member Antoine Martin (R) during a press conference of the Swiss Central Bank on monetary policy assessment, in Zurich on March 21, 2024. (Photo by Fabrice COFFRINI / AFP)
Zurich: The Swiss National Bank on Thursday became the first major central bank to cut interest rates after a sustained period of hikes designed to combat soaring inflation, with all eyes on when the US Federal Reserve will follow suit.
The SNB cut its rate by a quarter point to 1.5 percent following a Swiss tightening policy begun in June 2022.
In a busy week for central banks, the Federal Reserve on Wednesday held US interest rates steady, but left open the door to three interest rate cuts before the end of the year.
The Bank of England and Norwegian central bank kept their key interest rate unchanged on Thursday but are forecast to start cutting later this year.
Central banks worldwide ramped up borrowing costs in recent years to control inflation, which surged when economies emerged from Covid pandemic lockdowns and accelerated after energy producer Russia invaded agricultural power Ukraine in early February 2022.
In Switzerland, SNB chief Thomas Jordan said the decision to cut now was not to move before other central banks, but because it was "the right time" for the country.
The move sent the Swiss franc sliding to multi-month lows versus the dollar and euro.
"The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective," the SNB added in a statement.
"For some months now, inflation has been back below two percent and thus in the range the SNB equates with price stability."
