Breaking: SNB surprises with a 50 bps cut to Sight Deposit Rate

Following Thursday's quarterly monetary policy assessment, the Swiss National Bank (SNB) cut the benchmark Sight Deposit Rate by 50 basis points (bps) to 0.50% from 1.00%.

 The decision surprised markets, as they expected a 25 bps rate reduction to 0.75% in the quarter to December.

Summary of the SNB policy statement

Banks’ sight deposits held at the snb will be remunerated at the snb policy rate up to a certain threshold, and at 0% above this threshold.

Also remains willing to be active in the foreign exchange market as necessary.

SNB will continue to monitor the situation closely, and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.

The forecast for Switzerland, as for the global economy, is subject to significant uncertainty.

Developments abroad represent the main risk.

Uncertainty about the economic outlook has increased in recent months.

The future course of economic policy in the us is still uncertain, and political uncertainty has also risen in Europe.

It cannot be ruled out that inflation could remain higher than expected in some countries.

In this environment, unemployment should continue to rise slightly, while the utilisation of production capacity is likely to decline somewhat.

Market reaction to the SNB interest rate decision