The Swiss National Bank cut borrowing costs again to loosen constriction on the economy and stem gains in the franc, a move that contrasts with the hesitancy of global peers over easing.
Officials in Zurich lowered their benchmark by 25 basis points to 1.25% on Thursday after a decision that observers found hard to predict. Some investors bet on a cut, while a small majority of the economists surveyed by Bloomberg anticipated no change.
In a statement, the SNB said that "the underlying inflationary pressure has decreased again compared to the previous quarter."
The Swiss franc fell after the announcement, easing around 0.4% versus the euro, and tumbling 0.5% against the dollar.
The SNB — which led major advanced economies with the first reduction in the current cycle in March — is now doubling down on that approach. That differs from global counterparts, with the Federal Reserve having just pared back projected cuts this year, and the European Central Bank showing reluctance to move again soon.
Other decisions on Thursday may offer similarly cautious tones. Norwegian officials will probably delay prospective easing until even later this year, while while lingering inflation concerns will also keep the Bank of England on hold.
A three-week period of silence by SNB officials had left investors in the dark guessing the outcome. Franc gains and inflation that was low by international standards bolstered the case for a cut, but consumer-price gains stuck at this year's highest level were among arguments to hold.
The decision could expose the franc to downward pressure after a surge that began last month. President Emmanuel Macron's call for a snap election in France, with the prospect of a far-right victory there, further fueled gains in the currency as investors flocked to it as a safe asset.
President Thomas Jordan will address reporters together with his two colleagues on the central bank's board at 10 a.m. in Zurich. This will be the penultimate decision for the SNB chief, who is set to leave at the end of September.
Source: Bloomberg
