Swiss central bank cuts rate for second straight time

ZURICH, Switzerland — The Swiss National Bank announced Thursday its second straight interest-rate cut, after becoming in March the first Western central bank to slash borrowing costs that had been raised to battle inflation.

The SNB said in a statement that it was lowering the policy rate by 0.25 percentage points to 1.25 percent.

The bank also lowered its average annual inflation forecast for 2024 to 1.3 percent from 1.4 percent previously.

“The underlying inflationary pressure has decreased again compared to the previous quarter,” the statement said.

“With today’s lowering of the SNB policy rate, the SNB is able to maintain appropriate monetary conditions.”

Analysts had been divided about whether the bank would cut rates again or stand pat as inflation had risen again in April and May, reaching 1.4 percent, after falling to 1.0 percent in March.

READ: Higher interest rates drag Swiss National Bank to $3.6B loss

Central banks worldwide ramped up borrowing costs in recent years to control inflation, which surged when economies emerged from Covid pandemic lockdowns and accelerated after energy producer Russia invaded agricultural power Ukraine in early February 2022.

READ: Europe Central Bank jumps ahead of the Fed in lowering rates

Since the SNB’s March decision, the European Central Bank followed suit in June while the US Federal Reserve is expected to introduce only one rate cut later this year.

The Bank of England is widely expected to keep its rates unchanged later on Thursday, a similar decision taken by Norway’s central bank earlier in the day.