ZURICH—Switzerland’s central bank on Thursday cut its key interest rate by a quarter percentage point for the third time this year, citing the strong Swiss franc and lower inflationary pressure.
Following similar cuts in March and June, the Swiss National Bank brought the rate down to one percent — and indicated further reductions may be coming down the line.
“Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter,” the SNB said in a statement.
“Among other things, this decrease reflects the appreciation of the Swiss franc over the last three months. The SNB’s easing of monetary policy today takes the reduction in inflationary pressure into account.
“Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.”
While most economists expected the 0.25-percentage-point easing of monetary policy, some wondered whether the SNB might go further and follow the lead of the US Federal Reserve, which cut rates by half a percentage point on September 18.
Like gold, the Japanese yen or German bonds, the Swiss franc is one of the major havens in which investors take refuge in times of uncertainty.
Thursday’s decision came amid strong pressure from industry, particularly from the key watchmaking exports sector, to rein in the rise of the franc.
The franc has accelerated significantly against the euro in recent months, approaching its peaks of late 2023 and early 2024.
Since mid-July, the euro has lost around three percent of its value against the Swiss currency. AFP
