Swiss central bank cuts rates by a quarter point in third trim this year

The Swiss National Bank on Thursday took a third step to loosen monetary policy this year, bringing its key interest rate down by 25 basis points to 1.0%.

The trim, which had been anticipated by 30 of 32 analysts surveyed in a Reuters poll, marked the SNB's third interest rate reduction of 2024.

It was the first major Western central bank to reduce interest rates back in March.

The third trim comes amid similar signals from the European Central Bank and the U.S. Federal Reserve, which took the long-awaited plunge to slim down its interest rates with a 50-basis-point cut last week. Domestically, Swiss inflation remains subdued, with the latest headline print pointing to a 1.1% annual increase in August.

The Swiss franc gained ground against major currencies on the back of the latest interest rate decision. The U.S. dollar and euro were down nearly 0.14% and 0.16% against the Swiss coin, respectively — meeting ING analysts' expectations that the cut would lead to "outperformance" of the Swiss currency.

The strengthening of the Swiss currency in August prompted one of the country's largest associations, the technology manufacturers' group Swissmem to entreat the SNB to "act soon, in line with its mandate" and ease pressures constraining local businesses.

"This renewed exacerbation has come at a sensitive time for one of the key export industries: following a tough period of over a year, a slow recovery was in sight. If the upside pressure cannot be contained, these hopes will dissipate," Swissmem said at the time.

The SNB acknowledged the broader trend of its currency rally as a key contributor to the Thursday reduction.

"Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter. Among