Switzerland’s central bank has lowered its benchmark interest rate by 25 basis points for the second time this year.
The Swiss National Bank cut its key lending rate to 1.25% from 1.50%. The move was anticipated by two-thirds (67%) of economists who were polled by the Reuters news agency.
The second rate cut of the year comes as the Swiss central bank lowered its outlook for inflation, saying consumer prices are likely to rise 1.3% this year and 1.1% in 2025.
The latest data showed that inflation in Switzerland rose at an annualized rate of 1.4% in May of this year, unchanged from April.
In terms of the economy, the Swiss National Bank said it anticipates real GDP growth of 1% this year and 1.5% in 2025, with unemployment rising slightly.
Switzerland now has the second-lowest interest rates among industrialized nations after Japan. It was the first major economy to lower interest rates in March of this year and has since been followed by the European Central Bank and Bank of Canada.
Economists and traders expect the Swiss National Bank to reduce interest rates a third time in September of this year.
A growing number of advanced economies are diverging in their monetary policy from the U.S., where the Federal Reserve has held interest rates steady as inflation in America remains stubbornly above 3%.
Some economists expect that the Bank of England will be the next major central bank to lower interest rates as inflation in the United Kingdom has eased to 2%.
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