First Major Monetary Authority to Cut Rates Is in Switzerland
March 21, 2024
Among the most closely watched industrial country central banks, the Swiss National Bank today became the first one to actually reduce its policy interest rate. It is not surprising to see the SNB lead the way. Swiss inflation is particularly low, and Switzerland has a gold standard reputation of maintaining price stability. The economy also has a tendency toward exchange rate appreciation, which if excessive can depress economic growth. Officials at the SNB project only 1.0% economic growth in 2024 and made today’s rate cut in conjunction with updated CPI inflation forecasts that depict a lower future trajectory than did the previous forecast. CPI inflation is now seen averaging 1.4% this year, 1.2% next year and 1.1% in 2026 if the interest rate were not to be changed any further. The interest rate had been -0.75% from January 2015 until June 2022. An ensuing tightening cycle ended at 1.75% in June 2023, and today’s change reduces such to 1.5%.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Swiss National Bank
ShareThis
