The Swiss National Bank (SNB) unexpectedly cut its main interest rate by 25 basis points to 1.50%, becoming the first major central bank to reverse tighter monetary policy aimed at combating inflation, Reuters reports.
This move, the first rate cut in nine years, came alongside a reduction in the interest rate on sight deposits to 1.50%. The SNB attributed the easing of monetary policy to the effectiveness of its inflation-fighting measures over the past two and a half years, with inflation at 1.2% in February, remaining consistently within its target range of 0-2% for nine consecutive months.
The rate cut aims to alleviate reduced inflationary pressure and counteract the Swiss franc’s appreciation. The decision surprised markets, causing the Swiss franc to sharply decline against the dollar and euro.
