Swiss Central Bank unexpectedly cut interest rates by 50bp, putting pressure on the Swiss franc

On December 12th, Jinshi Data reported that the Swiss Central Bank unexpectedly increased its easing measures today, cutting interest rates by 50 basis points, putting pressure on the Swiss franc. Previously, the market generally expected the Swiss Central Bank to only cut interest rates by 25 basis points. After the Interest Rate resolution was announced, the Swiss franc fell by about 0.6% against the euro, further moving away from the near decade-high touched last month. Officials from the Swiss Central Bank stated in a statement, 'The Swiss Central Bank is still willing to actively participate in the forex market when necessary. The Swiss Central Bank will continue to closely follow the situation and adjust monetary policy when necessary to ensure that inflation remains within the range consistent with medium-term price stability.' This is also the largest interest rate cut by the Swiss Central Bank in the current cycle. Karsten Junius, Chief Economist at Swiss Bank, predicted this move and expects two further interest rate cuts of 25 basis points in the first half of next year. He said, 'Currently, inflation risks are declining, economic growth is below potential levels, and Switzerland's main exports are struggling with structural and cyclical issues.'