Swiss franc strengthens, Swiss National Bank cuts interest rate sharply by 50 basis points | Wilnesh News

The Swiss National Bank cut its key interest rate by 50 basis points on Thursday, beating expectations for a smaller cut amid sluggish inflation and a strong Swiss franc.

The move brings the bank’s key interest rate to 0.5%. More than 85% of economists polled Reuters had previously predicted that the bank would implement a 25 basis point rate cut.

Switzerland became the first major economy to ease monetary policy in March, cutting interest rates four times this year to stem a rise in its currency and falling consumer prices.

“Underlying inflationary pressures have declined again this quarter. Today’s easing of monetary policy by the SNB takes this development into account,” the bank said on Thursday after its first meeting under new chairman Martin Schlegel. “The SNB will continue to monitor the situation closely and adjust monetary policy if necessary to ensure that inflation remains within a range consistent with medium-term price stability.”

The bank has now issued new conditional inflation forecasts lower than in September, reflecting “lower-than-expected” declines in petroleum products and food, and predicting “little change over the medium term”.

The new outlook projects annual inflation to average 1.1% in 2024, 0.3% in 2025 and 0.8% in 2026.

Swiss inflation An increase of 0.7% Annual increase of 0.6% in November October. The Swiss franc is widely seen as a safe haven amid political turmoil in the euro zone and has largely refused to give up ground despite the Swiss National Bank cutting interest rates. The outlook for Swiss export opportunities, already constrained by tepid foreign demand and weak sales orders, is clouded by rising prices.

OctoberThe business climate index released by industry association Swissmechanic fell to its lowest level since January 2021, and the agency noted that orders, sales and profit margins are expected to decline further in the fourth quarter.

Industry association Swissmem reported in November that the Swiss technology industry continues to be sluggish. emphasize“Key indicators do not suggest that the economy will recover soon. Against this background, efforts at the political level must be stepped up to promote the Swiss export economy’s access to growing markets. Specifically, free trade.”

Official data showed overall economic growth was “below average” at 0.2% in the third quarter, after growing at 0.4% in the first three months. end of Novemberdragged down by the industrial sector.

Market focus will turn to the European Central Bank meeting later, with the ECB widely expected to cut interest rates by 25 basis points.