The Swiss National Bank cut interest rates by 25 basis points to 0.25% in what could be its final reduction of the current cycle. The move was expected, although money markets had showed some risk of unchanged rates. The Swiss franc and bond yields fall after the decision. The following is a selection of analyst comments.

SNB Keeps Options Open, But Easing Cycle Looks Done

1118 GMT - With Switzerland's inflation a touch above the Swiss National Bank's forecast, the central bank refrained from repeating December's 50 basis-point cut, reducing its key interest rate to 0.25% from 0.5%. "The Bank is keeping its options open, but we think the easing cycle is now done," Pantheon Macroeconomics' Melanie Debono says in a note. Indeed, the SNB raised its inflation forecast for 2025, confirming that it sees little risk of a prolonged period of deflationary pressure. Risks are, however, tilted to further easing, via lower housing rental inflation and a hit to growth should the U.S. raise tariffs on Swiss pharmaceuticals, though the SNB is unlikely to cut rates below zero, she says. (edward.frankl@wsj.com)

SNB's Latest Rate Cut Set to Be Last of Cycle

1022 GMT - The Swiss National Bank's rate cut to 0.25% will likely be the last in this cycle, Capital Economics' Adrian Prettejohn says in a note. While inflation was at only 0.3% in February and may fall further in the coming months, underlying inflation has been a little stronger than expected, limiting the need for more cuts, he says. Indeed, SNB staff ticked up their inflation forecasts for 2025 at the bank's rate decision. On top of that, Germany's large fiscal package, plus possible loosening of fiscal policy elsewhere in Europe, has decreased the likelihood of further cuts. Those announcements have increased the yield spread between German Bunds and Swiss bonds and weakened the franc, thereby loosening monetary conditions, he says. (edward.frankl@wsj.com)

Swiss Bonds Outperform Eurozone Peers After SNB Rate Cut

0851 GMT - Swiss government bonds outperform the bonds of eurozone sovereigns after the Swiss National Bank cut its key interest rate by 25 basis points to 0.25% on Thursday. Market expectations had been divided before the decision, although the majority leaned toward a policy rate reduction, according to LSEG data. The 10-year Swiss bond yield falls 4 basis points to 0.66%, while the 10-year German Bund yield falls just over 1 basis point to 2.782%, according to Tradeweb data. (emese.bartha@wsj.com)

Swiss Franc Falls After SNB Cuts Rates

0849 GMT - The Swiss franc falls after the Swiss National Bank cut interest rates by 25 basis points to 0.25%. Markets were pricing in a 65% chance of such a move, according to LSEG. The SNB pointed to low inflationary pressures and "heightened downside risks" to inflation. It said it would continue to monitor the situation closely and adjust its monetary policy if necessary to ensure price stability. The SNB noted solid economic growth in Switzerland in the fourth quarter of 2024 but said the outlook has become more uncertain given risks from global trade and geopolitical tensions. The euro rises to 0.9584 francs after the decision, from 0.9536 beforehand. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

March 20, 2025 11:45 ET (15:45 GMT)

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