SNB Cuts Rate and Warns of More to Come to Restrain Franc
The Swiss National Bank cut borrowing costs by a quarter point at a third straight meeting and warned of more to come if needed in its attempt to contain the strength of the franc.
Despite market speculation that officials in Zurich would follow the US Federal Reserve's lead with a half-point reduction, they shirked from any acceleration in easing. The interest rate is now 1% after a 25 basis-point move on Thursday that was predicted by most economists surveyed by Bloomberg.
"With today's easing of monetary policy, we are taking the reduction in inflationary pressure into account," SNB President Thomas Jordan told reporters. "Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term."
The outcome balances the SNB's determination to rein in the currency, whose strength threatens to depress prices and hurt exporters, against its need to conserve ammunition. With one of the world's lowest rates, the central bank has limited scope to keep reducing it in any extended confrontation with the foreign-exchange market.
Source : Bloomberg
