Swiss National Bank's official GDP growth reports

SNB Cuts Rates by 50 Basis Points to 0.50%, Signals Easing Bias

Dec 12, 2024, 09:04 AM

The Swiss National Bank (SNB) has unexpectedly reduced its key policy rate by 50 basis points to 0.50% from the previous 1.00%, marking the largest rate cut in nearly a decade. This move was aimed at countering the strength of the Swiss franc and managing inflation expectations. The SNB's decision was influenced by a decrease in underlying inflationary pressure and the need to maintain price stability over the medium term. The bank also adjusted its inflation forecasts, expecting inflation to reach 1.1% in 2024, 0.3% in 2025, 0.8% in 2026, and 0.7% in Q3 2027. SNB Chairman Martin Schlegel emphasized that the central bank remains ready to intervene in forex markets if necessary and highlighted the importance of the Swiss franc's development as a factor in their decision-making. The SNB expects GDP growth of about 1% for the current year. The Swiss franc weakened by 0.5% against the Euro following the announcement, signaling the market's reaction to the unexpected rate cut. This is the fourth cut in the current cycle, with the SNB maintaining an easing bias, although the likelihood of negative interest rates has diminished.