According to Caijing Shibao on June 20th, Swiss National Bank announced its latest monetary policy decision on Thursday, lowering interest rates by 25 basis points to 1.25%, in line with market expectations. Following the announcement, the US dollar against the Swiss franc rose slightly, and the Swiss SMI index rose by 0.4%.

In March, the Swiss National Bank surprisingly lowered its benchmark interest rate, becoming the first central bank of developed economies to cut interest rates. Now, amidst hesitation from major central banks, the Swiss National Bank has once again lowered interest rates.

The Swiss National Bank's latest statement said: "Compared with the previous quarter, potential inflationary pressures have fallen again. With the central bank lowering interest rates again, we are able to maintain an appropriate monetary environment."

Before the Swiss National Bank made this decision, the market expected a 68% probability of interest rate cuts and a 32% probability of maintaining interest rates.

Switzerland's inflation rate remained stable at 1.4% in May, which means that the price increase in the past 11 months was within the target range of 0-2% set by the Swiss National Bank, which is called price stability by the Swiss National Bank.

The Swiss National Bank also announced a reduction in its inflation expectations, with inflation rates expected to be 1.3% in 2024, 1.1% in 2025, and 1% in 2026. In addition, the Swiss National Bank expects the average inflation level for the year 2024 to remain around 1.4%.

Regarding the economic outlook, it is expected that the economic growth rate for this year will be approximately 1%, and it will accelerate to around 1.5% in 2025. The Swiss National Bank said: "Looking at the medium-term future, economic activity should gradually improve with the support of slightly stronger overseas demand."

UBS Group CEO Jordan said that potential inflationary pressures have decreased, but European political uncertainty has led to the appreciation of the Swiss franc. The central bank is still willing to actively participate in the foreign exchange market when necessary.

There may be action again within the year.

Recent strengthening of the Swiss franc against the euro may be a factor in the Swiss National Bank's decision to lower interest rates. UBS analyst Alessandro Bee said: "The market is starting to worry about French debt and the upcoming French elections, which may be a factor that the Swiss National Bank does not want the Swiss franc to appreciate too much. The possibility of further interest rate cuts is becoming more and more limited, as we get closer to the nominal neutral interest rate level of around 1%."

Karsten Junius, analyst at J Safra Sarasin, said that as expected, the Swiss National Bank has lowered its policy interest rate because basic inflation has once again fallen and long-term inflation expectations have once again fallen. An important trigger for interest rate cuts may be that the CPI index, excluding rent, fell below 1% recently, while economic activity still remains below potential levels. We expect the Swiss National Bank to lower interest rates by another 25 basis points in September, which will bring monetary policy back to neutral levels.

According to Macro Polo, the Swiss National Bank is unlikely to further lower interest rates this year in the current inflation situation. "Looking forward, we believe that the Swiss National Bank will not cut interest rates again this year. We no longer believe that potential inflationary pressures are weakening, as wage levels are growing at a strong rate, and inflation in the service sector remains very difficult."

In addition to the Swiss National Bank, the Norwegian central bank announced on Thursday that it would keep interest rates unchanged and said it may need to maintain the highest level of interest rates since 2008 in the remaining of the year. In addition, persistent inflation concerns and elections will also force the Bank of England to stand still.

In addition, the Federal Reserve has reduced its expectations of interest rate cuts this year and is expected to cut interest rates only once; and the European Central Bank has also said that it is not willing to cut interest rates again quickly.