Swiss National Bank leads interest rate cuts in developed countries

NEW YORK

The Swiss National Bank (SNB) issued its second rate cut in the last three months, becoming a leading player among major central banks in the easing of monetary policies.

Against expectations, the SNB cut its first policy rate in March by 25 basis points to 1.50%, becoming the first major central bank to do so.

The bank said that the fight against inflation has been successful in the last two and a half years, enabling the bank to ease its monetary policy.

The SNB continued its rate cuts on June 20, lowering the policy rate by 25 basis points to 1.25%.

Meanwhile, the Bank of Canada (BoC) cut its policy rate for the first time in four years in June by 25 basis points to 4.75%, in line with expectations, as the bank stated that the inflation will continue to reach the 2% target.

BoC Governor Tiff Macklem said at a press conference that the bank has come a long way in its fight against inflation, though they need more sustainable evidence of declining inflation to ease the monetary policy.

On June 6, the European Central Bank (ECB) cut the rates of refinancing operations, deposit facility, and marginal lending facility by 25 points to 4.25%, 3.75%, and 4.50%, respectively.

The cuts, which came in line with expectations, were the first since March 2016 for the refinancing and marginal lending facility rates, and since September 2019 for the deposit facility rate.

ECB President Christine Lagarde said at a press conference that inflation has declined enough for the central bank to start cutting interest rates.

In March, the Hungarian National Bank (MNB) cut its policy rate by 75 basis points to 8.25%, once again in April and May by 50 basis points to 7.25%, and again in June by 25 basis points to 7%.

Meanwhile, Sweden’s central bank, Riksbank, cut its policy interest rate for the first time in eight years by 0.25 basis points to 3.75% in May, citing the weak economy as a reason after combating high inflation.

The Czech National Bank (CNB) cut its key interest rates by 50 basis points in May, lowering the two-week repo rate to 5.25%.

The Bank of England (BoE) and the Fed maintained their respective policy rates at the 16-year and 23-year highs, respectively.

Additionally, the State Bank of Pakistan cut its policy rate by 150 basis points in June, the first rate cut since mid-2020.

*Writing by Emir Yildirim in Istanbul