Contrary to market expectations, the Swiss National Bank (SNB) cut its core interest rate on Thursday, getting ahead of its global peers.
The European Central Bank (ECB) is not expected to make its first rate cut until June, and the Fed has similarly left rates unchanged, despite expectations of three rate cuts in 2024.
The rate was cut by 25 basis points.
The SNB made the decision in response to declines in inflation and growth over the past 12 months, FXstreet writes.
Alongside cutting its key interest rate, the SNB also reduced its interest rate on sight deposits — deposits that one can withdraw from a bank with little to no notice — to 1.5%, as per Reuters.
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This cut is the SNB’s first reduction in borrowing costs in nine years.
According to Bloomberg, the franc slumped following the decision. It fell 1% against the euro and 1.2% against the US dollar, reaching its weakest levels in eight and four months, respectively.