In a move that has surprised financial markets, Switzerland has become the first major economy to lower interest rates, moving ahead of both the European Central Bank (ECB) and U.S. Federal Reserve.
The Swiss National Bank has lowered its main interest rate by 0.25 percentage points to 1.50%.
Economists polled by the Reuters news agency had expected the Swiss central bank to hold interest rates steady at 1.75%.
In a statement, the Swiss central bank said that inflation in the central European country is likely to stay below its 2% annualized target for the foreseeable future, necessitating the rate cut.
The inflation rate in Switzerland is currently at 1.20%, one of the lowest levels in the developed world.
The Swiss National Bank also reduced its annual inflation forecast, saying that it now expects inflation to average 1.40% this year, down from a 1.90% estimate previously.
The Swiss central bank added that it expects domestic economic growth “to remain modest” at about 1% this year.
The rate cut in Switzerland comes ahead of a monetary policy decision by the Bank of England, which is widely expected to leave interest rates unchanged.
Norway’s central bank just announced that it is holding its benchmark interest rate steady at 4.50%.
The European Central Bank has previously said that it needs to see more progress made in lowering inflation across the continent before it feels comfortable lowering lending rates.
