ZURICH – The Swiss central bank cut interest rates for the second time in a row on Thursday. At the previous meeting in March, the country's borrowing costs were lowered for the first time since June 2022. The Swiss National Bank (SNB) was the first of the world's major central banks to cut interest rates.
The Swiss interest rate has now fallen again by a quarter of a percentage point to 1.25 percent. The decision was in line with economists' expectations. The central bank announced in March that the fight against inflation had been successful. In May, inflation in Switzerland remained unchanged at 1.4%, and the Swiss Central Bank expects inflation to remain around that level this year.
Lower interest rates make borrowing money cheaper, which is what the central bank wants to boost economic growth. The Swiss Central Bank expects 1.2 percent growth for the Swiss economy this year.
Federal Reserve
With two successive interest rate cuts, the SNB appears to be deviating from the policies of other major central banks. The European Central Bank (ECB) cut interest rates for the first time earlier this month, but remains reluctant to cut interest rates too quickly. For example, European Central Bank President Christine Lagarde warned that the fight against inflation in the euro zone is not over yet, and further cuts are being considered at the meeting.
The US central bank even kept interest rates unchanged again this month and indicated that it plans to cut interest rates only once this year. The Federal Reserve had previously expected three cuts in 2024. The Norwegian Central Bank decided on Thursday to leave interest rates unchanged at the highest level in sixteen years. According to Norges Bank, interest rates are likely to remain at this level this year, with the first rate cut now only expected in 2025. This will be followed by a policy rate decision from the Bank of England later today.
