The Swiss National Bank together with Norway’s central bank reduced interest rates on Thursday while the U.S. Federal Reserve maintained its hawkish monetary policy due to worldwide economic uncertainties from trade disputes and Middle East conflicts.
The Swiss National Bank reduced its key interest rate by 25 basis points to zero because inflation decreased while maintaining the possibility of negative interest rates. The central bank of Norway which maintains a traditionally hawkish stance surprised markets by reducing its interest rate by 25 points while indicating lower inflation expectations.
The Bank of England maintained its current interest rate but indicated that it would lower rates gradually because of rising geopolitical uncertainties. The Fed has adopted a cautious monetary policy because President Trump’s rising tariffs might lead to higher prices.
Norway’s central bank governor Ida Wolden Bache explained that inflation decreased more than market projections based on May’s 2.8% inflation data. The Riksbank of Sweden reduced its interest rate to 2% during this week while indicating additional rate cuts are forthcoming.
The European Central Bank reduced its main interest rate during its previous meeting and indicated that future rate adjustments would be minimal. The path of interest rates depends heavily on how trade tensions and the Israel-Iran conflict develop because global inflation shows signs of slowing down.
