Swiss National Bank surprises with interest rate cut

The Swiss National Bank cut its main interest rate by 25 basis points to 1.50% on Thursday, a surprise move which made it the first major central bank to dial back tighter monetary policy aimed at tackling inflation.

It was the first decision since long-serving Chairman Thomas Jordan said he would step down in September.

The move caught economists by surprise, with a majority of analysts polled by Reuters expecting the SNB to keep rates on hold at 1.75%. It was also the first rate cut by the SNB in nine years.

The reduction comes after Swiss 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, which it defines as price stability.

"The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective," the SNB said in a statement.

The bank said that for some months, inflation had been back below 2% and thus in the range it equates with price stability. According to the latest forecast, inflation is also likely to remain in this range over the next few years, it added.