Swiss National Bank jumps with 50-basis-point interest rate cut amid franc strength

The Swiss National Bank on Thursday cut its key interest rate by 50 basis points, beating expectations for a smaller trim amid continued turmoil with depressed inflation and a strong Swiss franc.

The cut will bring the bank's prime rate to 0.5%. More than 85% of economists polling with Reuters predicting the bank would impose a 25-basis cut.

Switzerland was the first major economy to ease back on monetary policy in Marchimplementing four reductions this year in the battle to appreciate the national currency and decline in consumer prices.

Swiss Inflation up to 0.7% year-on-year in November, compared to an annual print of 0.6% in October. Widely seen as a safe haven amid political turmoil in the eurozone, the franc has largely resisted conceding ground despite the SNB's rate hikes. The rally has overshadowed the outlook for Swiss export prospects which are already being dampened by tight overseas demand and weak sales orders.

In OctoberThe business climate index produced by business association Swissmechanic fell to its weakest level since January 2021, with the group noting expectations of further declines in orders, sales and margins in the quarter season

Business association Swissmem reported in November a continued decline in Switzerland's tech sectors, pressure“Key indicators do not point to a recovery anytime soon. Against such a background, efforts at the political level must be strengthened to enable growth markets for the export economy of the -Switzerland. In hard terms, free trade.”

The overall economy recorded “below-average growth” of 0.2% in the third quarter, after 0.4% in the previous three months, official figures revealed at the end of Novemberweighed by the business sector.

Market focus will turn later in the session to a meeting of the European Central Bank, which is also widely expected to cut its rates by 25 basis points.

This new news is being updated.