Zurich - The Swiss National Bank (SNB) has once again lowered its key interest rate, marking the third such reduction this year. The decision, which was in line with market expectations, aims to stimulate the economy and combat subdued inflation.
The SNB's rate cut comes amidst a broader trend of central banks easing monetary policy. Both the European Central Bank and the U.S. Federal Reserve have recently reduced their interest rates. In Switzerland, inflation has remained relatively low, with August's headline print at 1.1 percent.
SNB Chairman Thomas Jordan acknowledged the possibility of further rate cuts in the coming months to stabilise inflation within the desired range. However, he emphasised that the decision would depend on the inflation outlook in December.
The bank revised its inflation forecasts downward, citing factors such as the stronger Swiss franc, lower oil prices, and announced electricity price cuts. The new outlook predicts average annual inflation of 1.2% in 2024, 0.6 percent in 2025, and 0.7 percent in 2026.
Following the rate cut, the Swiss franc gained value against major currencies. This appreciation has been a concern for Swiss businesses, particularly exporters. The SNB acknowledged the impact of the stronger franc on inflation and emphasised its commitment to ensuring price stability.
Overall, the SNB's decision to cut interest rates reflects its efforts to support the economy and maintain price stability in Switzerland.
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