Have you been keeping up with the latest moves in the global economy? The Swiss National Bank (SNB) recently made headlines by trimming its key interest rate by 25 basis points to 1.25%. This decision comes at a time when sentiment over monetary policy easing remains mixed among major economies.
Two thirds of economists polled by Reuters had anticipated this cut, and it did indeed impact the Swiss franc, causing the Euro to gain 0.3% and the U.S. dollar to rise 0.5% against the Swiss currency. The SNB also pegged its conditional forecast for inflation at 1.3% for 2024, 1.1% for 2025, and 1.0% for 2026, assuming an interest rate of 1.25% over the period.
Looking ahead, the SNB expects economic growth of around 1% this year and approximately 1.5% in 2025, with slight increases in unemployment and small declines in production capacity utilization. Analysts at Nomura characterized the decision as “finely balanced,” noting that weak underlying inflation momentum may increase the SNB’s confidence in reaching its inflation target.
Switzerland currently boasts the second-lowest interest rate among the Group of Ten democracies, following Japan. While other major economies like the European Central Bank have also cut rates, the U.S. Federal Reserve has yet to make a move. Market participants will be watching closely to see if the Bank of England follows suit, especially after U.K. inflation recently eased to the 2% target for the first time in nearly three years.
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