Swiss National Bank (SNB) has lowered its key interest rate for the second consecutive meeting, highlighting its divergence from central banks in Europe and the United States in managing inflation.
Following similar measures taken in January, the main rate of SNB has risen from 1.25% to XNUMX%.
According to the statement by SNB, “core inflation pressures have eased compared to the previous quarter.”
This decision by SNB comes shortly after the first interest rate cut since 2019 by the European Central Bank (ECB). Swiss policymakers have always been cautious about allowing a significant appreciation of the Swiss franc against the euro, as it could harm the country’s largest export market.
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“The Swiss National Bank is prepared to intervene in the foreign exchange market when necessary,” emphasized the central bank.
While lower rates may push up inflation due to a depreciation of the Swiss franc, the recent actions by the European Central Bank have eased SNB’s concerns about further interest rate cuts.
In Europe, the central banks of Czech Republic, Hungary, Sweden, and Serbia have also reduced borrowing costs this year. In contrast, the Federal Reserve has shown a preference for saving as it kept rates steady last week, indicating cautiousness towards potential rate cuts not starting before September.
