The Swiss National Bank cuts interest rates

They're the first central bank to cut rates in this cycle, and it came as a complete surprise to markets.

Interest rates went from 1.75% to 1.5%. So rates were pretty low to start with (for comparison interest rates in the UK and US are above 5%).

However, Swiss inflation is also low.

What's their secret? Answer: a strong currency.

Here is the chart of the euro v the swiss franc (remember, Switzerland is surrounded by the eurozone, so this is a key relationship):

source

Five years ago, 1 euro could buy you about 1.14 Swiss Francs. Now it gets you 97 centimes. That's a strengthening of 15%.

It was easy for the SNB to achieve. Prior to the pandemic they'd been actively intervening to weaken the Swiss franc (to counter all the money seeking a safe haven flowing in. But as soon as inflation reared it's head, they stopped and let the franc rise naturally. This made imports like oil and food cheaper.

It's hard for other central banks to replicate this as most don't have such strong inflows to their currency.