Swiss National Bank delivers another rate cut

Swiss bank rate cuts: The Swiss National Bank cut interest rates on Thursday, maintaining the central bank's position as a frontrunner in the global policy easing cycle now underway.

The SNB cut its policy rate by 25 basis points to 1.25 per cent, as expected by two-thirds of analysts polled by Reuters, following a similar cut in March.

Market reaction:

The euro was last up around 0.4 per cent against the franc at 0.9538, rising off a roughly four-month low before the decision. The dollar climbed 0.45 per cent to 0.8885 francs as the Swiss currency fell.

Switzerland's blue-chip stock index rose 0.5 per cent, having been little changed before the announcement.

Comments:

Gero Jung, Chief economist, Geneva, "We are not surprised by the SNB 25-bp cut."

"This is in line with a continuation of a monetary easing cycle that started in March, based on 1/ well-anchored inflation in Switzerland; 2/ in line with a global disinflation trend that will continue, according to the SNB’s latest statement; 3/ current interest rates remain high, including in real terms; r* is centred around zero, as outlined by SNB President Jordan in a late May speech; 4/ this decision is time-consistent."

"Given the decision in March to cut rates, why stop now? The SNB is in that respect consistent with its plan to turn towards a less restrictive monetary policy setting."

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