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Swiss National Bank cuts interest rate

Summary:
On 20 June 2024, the Swiss National Bank (SNB) has lowered its key interest rate by 0.25% to 1.25%. © Deaconsdocs | Dreamstime.comAccording to Thomas Jordan, the head of the SNB, inflationary pressure has receded somewhat. The Swiss franc has recently appreciated against the Euro, reducing the price of imported good and services. If the franc appreciates it dampens inflation and this is included in inflation forecasts. Jordan told SRF that the central bank wants to ensure that inflation remains within the target range over the medium term. Without this rate adjustment, there would have been a risk of inflation becoming too low in the future, something the bank wants to avoid. Another driver of inflation is wage growth. According to Jordan, there is moderate wage growth in

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On 20 June 2024, the Swiss National Bank (SNB) has lowered its key interest rate by 0.25% to 1.25%.

Swiss National Bank cuts interest rate
© Deaconsdocs | Dreamstime.com

According to Thomas Jordan, the head of the SNB, inflationary pressure has receded somewhat. The Swiss franc has recently appreciated against the Euro, reducing the price of imported good and services. If the franc appreciates it dampens inflation and this is included in inflation forecasts.

Jordan told SRF that the central bank wants to ensure that inflation remains within the target range over the medium term. Without this rate adjustment, there would have been a risk of inflation becoming too low in the future, something the bank wants to avoid.

Another driver of inflation is wage growth. According to Jordan, there is moderate wage growth in Switzerland, which is compatible with the goal of price stability. Wages have increased by just over 2%, a rate he expects to moderate without entering a wage-price spiral.

Another consideration is how other central banks act. The European Central Bank (ECB) has announced that it will probably end of rate cuts for the time being. However, the SNB is focused on managing Switzerland’s price stability.

Where the Swiss central bank rate will go from here is unknown, and Thomas Jordan was not prepared to offer any forecast on where the rate might go from here.

More on this:
SNB article (in French) – Take a 5 minute French test now

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