Inflation in Switzerland fell to a two-and-a-half-year low in March, aligning with the Swiss National Bank's (SNB) decision to cut rates last month for the first time since 2015, according to official data out on Thursday.

Consumer prices increased by 1% from March last year, the lowest since September 2021, and a decline from February's reading of 1.2%.

This marks the 10th consecutive month inflation has met the central bank's 0-2% target band.

A poll undertaken by Reuters forecast a 1.3% reading.

Switzerland has been insulated from inflation due to the strength of the Franc, leading to a 1.3% decrease in import prices during March. Additionally, the costs of food, restaurants, and hotels have fallen.

Last month, the Swiss National Bank reduced its key rate to 1.5% and said it forecasts inflation will stay low over the next few years.

Vice chairman of the SNB, Martin Schlegel, said last week that low inflation pressure allowed for the rate cut, with more forecast for this year according to analysts surveyed by Reuters.

Additionally, month-on-month prices remained the same, as per data from the Federal Statistics Office.

A further month of low inflation will provide reassurance to the central bank that it was right to slash rates, but it was too soon to influence the next policy decision due in June, said UBS economist, Maxime Botteron.

"The SNB will look more at the inflation situation in May before deciding what to do with rates in June, because then there will be the impact of increased rents in Switzerland," he said.

"The SNB will also consider what the ECB and the Fed do. If they cut rates, there's more likelihood of the SNB also cutting rates again because it will not want to risk the Franc rising in value again," said Botteron, who forecasts the SNB will cut rates to 1.25% in June and 1% in September.



  • Inflation,
  • Swiss National Bank,
  • SNB

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