Switzerland becomes first major economy to cut interest rates

 The Swiss National Bank lowered its interest rate to 1.5% from its previous value of 1.75%. This decision was made as the National Bank expects their inflation to remain below the target of 2%. This comes as a surprise to many economists who expected the Swiss inflation rate to remain at 1.75%. However, with inflation falling to 1.2% in February and forecasts indicating price stability in the coming years it is not shocking that they have started to relax their interest rates. 

Following this rate cut and with the projected inflation through 2026 having an average of 1.1%, economists now expect two more cuts to the interest rate by the end of this year. This will lead to the policy rate being taken all the way down to 1% in December of this year if these expectations are correct. 

The Swiss National Bank expects national as well as global economic growth to remain moderate throughout the year but mentions there is significant uncertainty in many global markets as well as political tensions that could cause large changes in their expectations. 

This makes Switzerland the first advanced economy to lower its interest rates following the high inflation that came after the pandemic. This decision comes quickly after both the United States and Norway elected to hold their rates, however, it is likely that many other countries will quickly follow suit with the United States Federal Reserve still expecting to make three rate cuts in 2024.

Source - https://www.cnbc.com/2024/03/21/switzerland-becomes-first-major-economy-to-cut-interest-rates-in-surprise-move.html