On September 26th, the Swiss National Bank announced another interest rate cut of 25 basis points — this is the third rate cut by the Swiss National Bank this year, echoing the global rate cut cycle initiated by the European Central Bank and the Federal Reserve.

The Swiss National Bank's rate cut aligns with market expectations. Before the announcement, the relevant markets had set the probability of a 25 basis point rate cut at 55%. Additionally, in a Reuters poll, 30 out of 32 analysts anticipated this rate cut action.

After the 25 basis point rate cut, the Swiss National Bank's policy rate has dropped to 1.00%, the lowest level since the beginning of 2023. This decision is also the last interest rate resolution by the Swiss National Bank President Thomas Jordan during his 12-year tenure.

Following the announcement, Jordan stated that Switzerland's inflationary pressures have significantly decreased, and the Swiss National Bank is prepared for another rate cut. He said that it might be necessary to further lower the Swiss National Bank's policy rate in the next few quarters to ensure medium-term price stability.

Along with the resolution, the Swiss National Bank also released its economic forecasts. The bank has revised down its inflation expectations for Switzerland in 2025 and 2026, and predicts that Switzerland's consumer price growth will be 0.6% in the second quarter of 2027. Recently, Switzerland's inflation level has performed well, slowing further to 1.1% in August, and for the past 15 months, this figure has remained within the central bank's target range of 0.2%.

In recent weeks, the Swiss Franc has also entered an upward trend. At the beginning of August, the Swiss Franc's exchange rate against the Euro reached a 9-year high, exacerbating the difficulties faced by Swiss exporters. Surprisingly, after the announcement of the 25 basis point rate cut, the Swiss Franc continued to strengthen.

Regarding the Swiss National Bank's rate cut, Charlotte Montpellier, Senior Economist at ING, stated that the Swiss National Bank's 25 basis point rate cut is the "most dovish approach." She said that the Swiss National Bank not only clearly indicated that further rate cuts might be necessary but also significantly revised down its inflation expectations, with policy measures exceeding expectations.

Karsten Junius, Chief Economist at J Safra Sarasin, also said that the Swiss National Bank's approach is more dovish than the market expected. He said that the Swiss National Bank made the strongest hint at future policy in this resolution, breaking the previous communication pattern. The Swiss National Bank clearly stated that further rate cuts might be needed in the future to address undesirable low inflation, and this wording is strong.

After the Swiss National Bank announced the rate cut, investors turned their attention back to the U.S. economic data. This evening, the U.S. will release a series of economic data, including the weekly change in the number of initial jobless claims, the preliminary value of the U.S. August durable goods orders monthly rate, and the market-focused final value of the U.S. second quarter GDP.

This trading day will also see speeches from several Federal Reserve officials. Yesterday, Federal Reserve Governor Adriana Kugler stated that she expects inflation not to fall below the Federal Reserve's 2% target. She pointed out that although some inflation indicators excluding housing are below the target, the target is aimed at the overall inflation indicator, which is approaching but still above 2%.