Official announcements from the Swiss National Bank

Swiss National Bank Slashes Rates by 50 Basis Points to 0.50% in Surprise Move

Dec 12, 2024, 08:31 AM

The Swiss National Bank (SNB) has unexpectedly reduced its key policy rate by 50 basis points to 0.50% from 1.00%, marking its fourth rate cut in this cycle but the first significant cut. This move was aimed at intensifying the defense of the Swiss franc, which has been under pressure due to its strength. The SNB's decision was influenced by a decrease in underlying inflationary pressure and comes as a surprise to market expectations, which had anticipated a smaller 25 basis-point cut. The bank also revised its inflation forecast for 2024 to 1.1% from a previous estimate of 1.2%, with forecasts for 2025 at 0.3% and 2026 at 0.8%. Additionally, the SNB expects GDP growth of about 1% for the current year, anticipates a slight rise in unemployment, and a decline in production capacity utilization. The SNB remains ready to intervene in the forex market if necessary to maintain price stability over the medium term.