BERN (Reuters) -The Swiss National Bank cut its interest rate by 50 basis points on Thursday, its biggest reduction in almost 10 years as it sought to stay ahead of expected cuts by other central banks and cap the rise of the Swiss franc.
The SNB reduced its policy rate from 1.0% to 0.5%, the lowest level since November 2022.
More than 85% of economists polled by Reuters had expected a smaller cut of 25 basis points, although markets had predicted the 50 point cut.
The cut was the steepest drop in borrowing costs since the SNB’s emergency rate cut in January 2015 when it suddenly quit its minimum exchange rate with the euro.
“Underlying inflationary pressure has decreased again this quarter. The SNB’s easing of monetary policy today takes this development into account,” the SNB said.
“The SNB will continue to monitor the situation closely, and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.”
Thursday’s decision was the first under new SNB Chairman Martin Schlegel, and saw an acceleration from the policy of predecessor Thomas Jordan, who oversaw three reductions of 25 basis points this year.
It was made possible by weak Swiss inflation, which was 0.7% in November, and has been within the SNB’s 0-2% target range, which it calls price stability, since May 2023.
