Switzerland becomes first developed economy to cut interest rate

The Swiss National Bank cut interest rates on March 21 - the first to do so among the major central banks, saying the battle against inflation was working almost two years after launching its monetary tightening campaign.

The SNB eased its monetary policy and cut its rate by 0.25 percentage points to 1.5 percent, effective from Friday, in its first interest rate cut since it began to hike them in June 2022, France24 reports.

In a busy week for central banks, the Federal Reserve on Wednesday held US interest rates steady but left open the door to three interest rate cuts before the end of the year.

The Bank of England is widely expected to keep its main interest rate at a 16-year high of 5.25 per cent on Thursday, rejecting a cut as inflation remains well above target despite recent slowing.

And the Norwegian central bank on Thursday kept its key interest rate unchanged at 4.5 per cent but signalled it could start cutting later this year.

But the SNB changed its monetary policy for the first time since the rapid tightening initiated in 2022, in a move that surprised most analysts who were expecting the SNB to hold off until June -- when the Fed and European Central Bank are also expected to cut their rates.

SNB chief Thomas Jordan said the decision to cut now was not to move before other central banks, but because it was "the right time" for Switzerland.

"The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective," the central bank said in a statement.

"For some months now, inflation has been back below two percent and thus in the range the SNB equates with price stability."