The question was not whether the Swiss National Bank (SNB) would cut rates. Rather, the main debate beforehand was about how large the rate cut would be, especially in light of the recent rate reductions by the US Federal Reserve.

The US Federal Reserve had taken swift action after a period of hesitation, cutting its key interest rate by 0,5 percentage points instead of 0.25 percentage points last week, despite the fact that the American economy still appears to be fundamentally strong.

SNB Does Not Rule Out Further Cuts

The SNB refrained from making any drastic moves and lowered the key interest rate by 0,25 percentage points to 1,0 percent on Thursday. The change takes effect on Friday. Sight deposits of banks held at the SNB will earn interest at the SNB key rate up to a certain limit, and above this limit, they will earn 0,5 percent.

At a press briefing on Thursday, Thomas Jordan indicated that the SNB is prepared to intervene in the foreign exchange market if necessary.

«Inflationary pressure in Switzerland has decreased significantly compared to the previous quarter. This decline partly reflects the appreciation of the franc over the past three months. With today’s easing of our monetary policy, we are responding to the reduced inflationary pressure,» Jordan emphasized.

At the same time, he pointed out that further rate cuts might be necessary in the coming quarters to ensure price stability in the medium term.

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