Switzerland makes second interest rate cut as major economies diverge on monetary policy easing

CNBC ^ | 6/20/24

[EBH]

The Swiss National Bank on Thursday trimmed its key interest rate by 25 basis points to 1.25%, continuing cuts at a time when sentiment over monetary policy easing remains mixed among major economies.

Two thirds of economists polled by Reuters had anticipated the SNB would decide in favor of a 25-basis-point-cut to 1.25%.

The Swiss franc weakened in the wake of the announcement, with the Euro gaining 0.3% and the U.S. dollar up 0.5% against the Swiss currency at 8:55 a.m. London time.

Following the Thursday decision, the Swiss central bank pegged its conditional forecast for inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026. The figures assumes a SNB interest rate of 1.25% over the prediction period.

The country’s inflation flatlined at 1.4% in May after a bump up in April and is expected to average the same level across full-year 2024, according to the SNB’s latest projections.

The Swiss bank said it now anticipates economic growth of around 1% this

[EBH]

The U.S. Federal Reserve has yet to blink on interest rate reductions, and market participants will be following later in the Thursday session to see if the Bank of England takes the leap to trim, after U.K. inflation eased to the 2% target for the first time in nearly three years.

[avital2]

i doubt Swiss are running a $2 trillion deficit - giving them room to cut.

[Redmen4ever]

U.S. journalists don’t get it.

The Fed’s target is 2 percent inflation. We’re not there yet.

Journalists are like a bunch of kids in the back seat. “Are we there yet? Are we there yet?”

Switzerland currently has 1 percent inflation. They’re there.

ALSO Switzerland is running a small surplus. We’re running a deficit 6 god damn percent of GDP.

With the unsustainable deficit that we have, it is very difficult for the central bank to achieve price stability (defined as 2 percent CPI inflation). Maybe even impossible.

[Bobbyvotes]

Damn, that means I will get less interest for my money there :)

[Theoria]

Switzerland doesn’t police and finance the world.

[Paladin2]

2% inflation is roughly 2% too high.

Is the inflation “good news” just data from a month extrapolated to an annual rate or based on data from the last 12 months?

What’s the forward looking projection?