The Swiss National Bank (SNB) announced a twenty-five basis point cut to its benchmark interest rate on Thursday, bucking a global trend among other central banks committed to keeping rates elevated.

Should others follow, it could be a promising sign for crypto markets—which have historically ebbed and flowed in line with global macroeconomic policy.

“For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability,” explained the central bank regarding its decision. In February, the nation’s inflation rate fell to just 1.2%, with the central bank now forecasting an average inflation rate of 1.4% in 2024 and 1.2% in 2025.

The bank’s new policy rate is 1.5%, down from the 1.75% level it had maintained since June last year. Before that, the bank raised rates for one year straight from -0.75%, which it previously held since January 2015.

Economists polled by Reuters initially expected the central bank to keep rates elevated for several more months. The surprise move drove down Swiss government bond yields on Thursday, as well as the value of the Swiss Franc against the Euro and U.S. dollar.

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Author: Andrew Throuvalas

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