Switzerland surprises with rate cut, who’s next?

By Thomson Reuters Mar 21, 2024 | 8:58 AM

By Alun John and Naomi Rovnick

LONDON (Reuters) – The Swiss National Bank kicked off rate cuts on Thursday, the week’s second momentous central bank decision after the non-conformist Bank of Japan delivered its first rate hike in 17 years.

The U.S. Federal Reserve on Wednesday stuck to its projections of 75 basis points (bps) of rate cuts this year, and the Bank of England on Thursday said the economy was moving in the right direction for it to start rate cuts.

Here’s how big central banks stand.



The Swiss National Bank cut rates by 25 bps to 1.50% on Thursday, a surprise move that pushed the franc to eight-month lows against the euro while Swiss government bonds rallied.

It was the SNB’s first rate cut in nine years, and comes after inflation dipped to 1.2% in February, the ninth month in succession that price rises have been within the SNB’s 0-2% target range.



Sweden’s central bank, which left its key rate steady at 4% in February, said it might be able to bring forward the timing of a first rate cut if inflation continues to slow.

The Riksbank makes its next rate decision on March 27. Economists see the first round of easing in May or June.


The ECB kept borrowing costs at record highs earlier this month, but took a small step towards lowering them, saying inflation was easing faster than it had anticipated a few months ago.

Markets price around 90 bps of cuts this year, with roughly an 80% probability of the first cut coming in June, an outlook some ECB policymakers appear aligned with.

But market rate cut bets could shift based on what may happen in the United States. By cutting before the Fed, the ECB risks euro weakness that may re-stoke inflation.


The Fed, on Wednesday, held rates steady at 5.25% to 5.5% where they have been since July 2023.

More notably than the decision itself, chair Jerome Powell said recent high inflation readings had not changed the underlying story of slowly easing price pressures as the Fed maintained its forecasts for three 25 bps rate cuts this year.

Markets are broadly aligned with this, pricing roughly 75 bps of U.S. rate cuts in 2024 versus 150 bps at the start of the year. A first move is seen as most likely in June.



The Bank of Canada’s next rate decision is due on April 10 with the central bank widely expected to keep its key overnight rate steady at a multi-decade high.

The BoC kept rates at 5% in early March, and said underlying inflation meant it was too early to consider a cut. Markets see them cutting by around 60 bps this year with June the most likely start.


The BOE kept rates unchanged at a 16-year high of 5.25% on Thursday, but governor Andrew Bailey said the economy was “moving in the right direction” for a cut.

Two policy makers dropped their vote a rate hike.

Market pricing shows traders think a 25 bps rate cut by June is slightly more likely than not, they are fully pricing in two such rate cuts in the three meetings to September.



The Reserve Bank of Australia held rates steady on Tuesday at a 12-year high of 4.35% but softened its stance by dropping a warning about further hikes that had appeared in previous monetary policy statements.

Markets suggest the first cut could come in August or September.


Reserve Bank of New Zealand deputy governor Christian Hawkes told Reuters this month that interest rates, at a 15-year high of 5.5%, need to stay restrictive for some time.

But the mood could shift before the RBNZ’s next rate decision in April. Finance minister Nicola Willis warned last week that economic growth in coming years will be “significantly slower” than previously expected.


Norway’s central bank left rates unchanged at 4.50% on Thursday, as expected, and signalled it plans a single cut this year, less than anticipated by most economists.

Markets anticipate easing in September as most likely and another by year end.



The Bank of Japan continues to plough its own furrow. It has ended eight years of negative rates, bringing rates up to a range of 0-0.1%, and abandoning yield curve control — where it purchased vast amounts of Japanese government bonds to cap borrowing costs.

With inflation exceeding the BoJ’s target for over a year, a shift had been expected in March or April. Still, the moves were a mark of confidence from the BoJ that Japan has finally emerged from the grip of deflation.

(Reporting by Alun John and Naomi Rovnick, editing by Dhara Ranasighe and Alexandra Hudson)