Snb Shows Reluctance to Cut Again After Rate Hits 2 1/2-year Low

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(Bloomberg) -- Swiss National Bank officials cut their interest rate to the lowest since September 2022 to deter inflows into th

(Bloomberg) -- Swiss National Bank officials cut their interest rate to the lowest since September 2022 to deter inflows into the franc, and declared another reduction is less likely for now.

Officials led by President Martin Schlegel trimmed their benchmark by a quarter point to 0.25% on Thursday, in a step anticipated by traders and a large majority of economists. He signaled to reporters in Zurich that the central bank doesn’t anticipate more easing at the current juncture.

“This rate cut has an expansionary impact,” Schlegel said. “In that sense, the probability of additional policy easing is naturally lower.”

The SNB’s fifth step in the current cycle leaves its rate at the lowest of any managing the world’s 10 most-traded currencies. Analysts largely reckon that this was its final reduction of the cycle.

The Swiss franc erased gains after the decision, traded slightly lower at 0.9572 versus the euro. Swaps pricing indicates traders expect no more rate cuts by the SNB this year.

The central bank’s activism contrasts with the hesitancy to ease further by global peers such as the US Federal Reserve, which on Wednesday acknowledged a backdrop of high uncertainty. Similarly, Sweden’s Riksbank kept borrowing costs unchanged and said it has finished cutting.

The SNB move, following up on a surprise half-point reduction in December, shores up its foreign-exchange policy in anticipation of volatile times ahead. While the franc has weakened this year, the currency remains a potential haven for investors guarding against instability just as US President Donald Trump ratchets up global trade tensions and war continues to rage in Ukraine.

“We also remain willing to be active in the foreign exchange market as necessary,” Schlegel said, sticking with the SNB’s standard language, as observed how the backdrop has shifted. “Uncertainty about global economic and inflation developments has increased significantly.”

What Bloomberg Economics Says...

“This decision reflects the increased uncertainty around the inflation outlook amid threats of tariffs and a high level of geopolitical uncertainty, both of which could put upward pressure on the currency. The decision can be seen as insurance against those risks.”

—Jean Dalbard, economist.

The reduction might pre-emptively dissuade inflows, but also uses up precious room for easing before reaching zero, which is now just one conventional quarter-point step away.

Dropping the rate to that level would force officials into a tough choice between market interventions to repel foreign-exchange speculation or else going negative again, as they did in the period from 2015 until 2022.

While subzero borrowing costs inflict pain on the country’s financial system, selling the franc could potentially drawing the ire of Trump, whose administration branded Switzerland as a currency manipulator when he was last in office.

Data released this week showed the SNB largely kept out of foreign exchange markets in the final three months of 2024, marking a full year without sizable interventions. While the franc rose against the euro after Trump’s election in November, it erased those gains and has since weakened.

“I can clearly say Switzerland is not a currency manipulator,” Schlegel told Bloomberg Television on Thursday. Past “interventions were necessary to maintain price stability,” he said. “This was not to gain competitive advantage for Switzerland.”

The decision to cut and contain market pressure is intended to stop strength in the currency from lowering import costs too far, hurting inflation. Consumer-price growth has weakened considerably from a peak of 3.5% to reach near zero in February.

Officials slightly lifted their forecast for 2025 inflation on Thursday. They now expect it to average 0.4% this year, and 0.8% in 2026 and 2027, after it was previously seen at 0.3% in 2025 and 0.8% in 2026.

The outlook for inflation “is currently very uncertain,” Schlegel said. “The risks are predominantly to the downside.”

Policymakers kept intact their outlook for Switzerland’s economy after the strongest expansion in almost two years last quarter. The SNB still expects growth in a range of 1-1.5% this year.

“This was the last rate cut of the SNB this year,” said Karsten Junius, the chief economist at Bank J Safra Sarasin. “Upward revisions of the inflation profile indicate that no further rate cut is needed.”

Source: Yahoo Finance

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Warren Takunda

Economic

The New Zealand economy was surprisingly strong in the final quarter of 2024, but the New Zealand Dollar is struggling.

The New Zealand economy grew 0.7% q/q in Q4 said Statistics New Zealand, exceeding estimates for 0.5% and the Reserve Bank of New Zealand's projection of 0.3%.

"Today’s print confirms that New Zealand has likely passed the worst of its downturn," says Bader Al Sarraf, an analyst at Standard Chartered.

The NZD should be rallying on the news as the strong outcome provides some cover for the Reserve Bank of New Zealand (RBNZ) to stop cutting interest rates, removing a major drag on the currency.

The market reaction suggests this is unlikely to happen:

The Pound-to-New Zealand Dollar exchange rate (GBP/NZD) is half a per cent higher on the day at 2.2480 and EUR/NZD is 0.56% higher at 1.8850.

NZD/USD is three-quarters of a per cent down at 0.5772.

So why is the New Zealand Dollar weaker despite the strong GDP data?

Currency analysts say a selloff in the Australian Dollar following surprisingly poor labour market data is weighing on the New Zealand dollar.

"NZD/USD fell by around 0.5% alongside a lower AUD," says Joseph Capurso, an economist at Commonwealth Bank of Australia.

On the same day NZ GDP numbers were released, Australian employment figures came out, showing a significant 52.8k fall (it was expected to rise by 30k) in February.

And, the previous month's number was revised lower to a 30.5k increase.

New Zealand Dollar is Dropping, Despite Genuine Good Economic News_1

Above: The NZD falls against GBP as Australian bond yields fall (lower panel). This confirms expectations for a quickening in rate cuts in Australia is weighing on NZD.

The Australian labour market data surprise prompted markets to increase expectations for an acceleration in interest rate cuts at the Reserve Bank of Australia.

This weighed on Australian bond yields, pulling the closely correlated New Zealand bond yield lower. The AUD and NZD were, in turn, dragged lower by falling yields in both countries.

In short, markets see a slowdown on Australia being bad for New Zealand, regardless of the solid Q4 economic data.

Economists at Auckland-based ASB say they are sceptical that the growth drivers in Q4 can maintain their pace given the broader global headwinds.

They, like other analysts, think more rate cuts are in store for New Zealand.

"While today’s print confirms that New Zealand has likely passed the worst of its downturn, we believe growth remains well below potential, and output is still far from levels that would threaten inflationary stability," says Standard Chartered's Al Sarraf.

"We expect the RBNZ to look through this stronger-than-expected Q4 print, as it has already placed greater weight on high-frequency indicators, which remain consistent with gradual monetary easing," adds Al Sarraf.

Markets are currently about 70bp of RBNZ interest rate cuts by year-end, which is weighing on New Zealand yields and its Dollar.

Source: Poundsterlinglive

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Michelle

Economic

Forex

ZURICH (March 20): The Swiss National Bank cut its policy interest rate by 25 basis points on Thursday, leaving borrowing costs just above zero, arguing that inflationary pressures were low despite uncertainty over the impact of US President Donald Trump's trade policies.

The SNB reduced its key rate to 0.25% from 0.5%, its fifth successive cut since it started lowering borrowing costs in March 2024, matching economists' expectations in a Reuters poll.

The Swiss franc weakened slightly against both the euro and the dollar after the decision.

It was last flat at 0.95705 against the euro, having traded around 0.9537 earlier and at 0.8803 to the dollar, leaving the US currency up 0.4% on the day.

"The SNB was not only the first big central bank to have started cutting rates in this cycle, with this step today, it likely is also the first one to have finished cutting rates," said Karsten Junius, chief economist at Bank J Safra Sarasin.

"The upward revisions of inflation profile indicate that no further rate cut is needed."

The decision comes on a busy day for central banks, with the Bank of England and Sweden's central bank also due to announce their policy decisions on Thursday.

The US Federal Reserve on Wednesday held interest rates steady, citing a period of "unusually elevated" uncertainty linked to the initial policies of the Trump administration.

The new 0.25% rate is the SNB's lowest since September 2022, and brings it close to sub-zero interest rates again, a move it has previously not ruled out.

"With today's rate adjustment, the SNB is ensuring that monetary conditions remain appropriate, given the low inflationary pressure and the heightened downside risks to inflation," the SNB said.

The cut aims at preventing a further decline in Swiss inflation, which eased to 0.3% in February, its lowest level in nearly four years, and keeping it within the 0-2% target range which the central bank defines as price stability.

The SNB said that its baseline scenario anticipated that global growth will be moderate over the coming quarters and that underlying inflationary pressure should continue to ease gradually over the next quarters, particularly in Europe.

It noted, however, that this scenario for the global economy is currently subject to high uncertainty.

"The situation could change rapidly and markedly, particularly from a trade and geopolitical perspective. For example, increasing trade barriers could lead to weaker global economic development," it said.

"At the same time, a more expansionary fiscal policy in Europe could provide stimulus to the economy in the medium term."

Source: Theedgemarkets

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Warren Takunda

Stocks

With the Federal Reserve's policy meeting out of the way, the central bank spotlight now turns to some of its European counterparts - the Bank of England, the Swiss National Bank and the Riksbank - with rate decisions due later today.

The BoE, at centre stage, is widely expected to keep rates on hold as it monitors the economic impact of U.S. President Donald Trump's tariff onslaught and the British government's imminent tax hike for employers.

With UK inflation stuck stubbornly above its 2% target, the BoE has cut borrowing costs by less than the European Central Bank and the Fed since last summer, contributing to the country's sluggish growth rate.

Ahead of that, investors will get UK wage data to chew on. Expectations are for pay growth across the whole economy, excluding bonuses, to have held steady at an annual 5.9% rate in the three months to January.

The Riksbank is similarly expected to stand pat on rates on Thursday, while economists see the SNB cutting its main policy rate by a quarter percentage point and holding it there until at least 2026.

Trump weighed in on Fed policy on Wednesday, saying the central bank would be better off cutting rates "as U.S. tariffs start to transition (ease!) their way into the economy", just hours after it left rates unchanged.

Fed Chair Jerome Powell said the Trump administration's initial policies, including extensive import tariffs, appear to have tilted the U.S. economy towards slower growth and at least temporarily higher inflation, even as policymakers still projected two rate cuts this year.

Morning Bid: Central Bank Baton Passes to Europe_1

Table displaying the most recent U.S. interest rate decisions made by the Federal Open Market Committee

Despite the risks to the U.S. economic outlook, investors chose to latch on to the prospect of further Fed easing ahead, sending stocks in Asia higher on Thursday.

Europe, meanwhile, looked set for a mixed open, with EUROSTOXX 50 futures up 0.07% but FTSE futures down 0.14%.

Geopolitics also remained prominent on investors' radar.

Israel's military said it intercepted a missile launched from Yemen early on Thursday as hostilities with the Houthis intensified. Trump has threatened to punish Iran over its perceived support for the Yemeni militant group.

The escalation of tensions in the Middle East sent oil prices higher on Thursday, with Brent crude futures up 0.55% and U.S. crude futures gaining 0.46%.

But capping those gains was the prospect of a return of Russian supply to the market, after Ukrainian President Volodymyr Zelenskiy said a halt to energy strikes in the war with Russia could be established quickly.

Trump and Zelenskiy agreed on Wednesday to work together to end Russia's war with Ukraine, in what the White House described as a "fantastic" one-hour phone call.

Key developments that could influence markets on Thursday:

- Bank of England, Swiss National Bank, Riksbank policy decisions

- UK wage data (January)

Source: Reuters

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Warren Takunda

Stocks

Asian shares were mostly higher Thursday following an advance on Wall Street after the Federal Reserve said the economy still looks healthy enough to keep interest rates where they are.

Markets were closed in Japan for a holiday.

Hong Kong’s Hang Seng lost 2.1% to 24,455.60 and the Shanghai Composite index dropped 0.5% to 3,408.98.

In South Korea, the Kospi jumped 0.3% to 2,637.10, while Australia’s S&P/ASX 200 added 1.2% to 7,918.90.

Taiwan’s Taiex jumped 1.9%, while the SET in Bangkok rose 0.4%.

On Wednesday, U.S. stocks also got a boost from easing yields in the bond market. When Treasurys are paying investors less in interest, investors may be willing to pay higher prices for stocks.

The S&P 500 jumped 1.1% to 5,675.29, while the Dow Jones Industrial Average gained 0.9% to 41,964.63. The Nasdaq composite rose 1.4% to 17,750.79.

The rally followed weeks of sharp and scary swings for the U.S. stock market as investors fret over how much pain President Donald Trump will allow the economy to endure in order to remake the system. He’s said he wants manufacturing jobs back in the United States and far fewer people working for the federal government.

Trump’s barrage of announcements on tariffs and other policies have created so much uncertainty that economists worry U.S. businesses and households may freeze and pull back on their spending.

Fed Chair Jerome Powell acknowledged the rising pessimism among U.S. consumers and companies shown by recent surveys, but he also pointed to data such as relatively low unemployment that show the economy is still strong. It’s possible to have periods where “people say downbeat things about the economy and then go out and buy a new car,” he said.

“Given where we are, we think our policy is in a good place to react to what comes, and we think that the right thing to do is to wait here for greater clarity about what the economy’s doing,” Powell said.

The Fed has been holding interest rates steady this year after cutting them sharply through the end of last year. While lower rates can help give the economy a boost, they can also push inflation upward.

Fed officials indicated they’re still penciling in two cuts to the federal funds rate by the end of this year, just as they were forecasting at the end of last year. But they are also seeing weaker growth for the U.S. economy and higher inflation than they were before. More than anything, the message from the Fed seemed to be how much uncertainty is clouding everything.

Powell pushed back against fears about what’s called “ stagflation,” where the economy stagnates but inflation remains high. The Fed doesn’t have good tools to fix such a toxic combination. The last time the U.S. economy suffered through it was in the 1970s, and Powell said, “I wouldn’t say we’re in a situation that’s remotely comparable to that.”

The yield on the 10-year Treasury dropped to 4.24% from 4.31% just before the Fed announced its decision. The Fed said it will also begin paring the monthly reductions of its trove of Treasurys beginning in April. Such a move can help keep longer-term yields lower than they would otherwise be.

On Wall Street, Nvidia helped support the market after rising 1.8% to cut its loss for the year so far to 12.5%. It hosted an event Tuesday where it largely “did a nice job laying out the roadmap” and fighting back against speculation the artificial-intelligence industry is seeing a slowdown in demand for computing power, according to UBS analysts led by Timothy Arcuri.

Tesla rose 4.7%, following two straight losses of roughly 5%. It’s still down 41.6% for 2025 so far. It’s been struggling on worries that customers are turned off by CEO Elon Musk’s leading efforts to slash spending by the U.S. government.

In other dealings early Thursday, U.S. benchmark crude oil gained 47 cents to $67.38 per barrel. Brent crude, the international standard, was up 46 cents at $71.24 per barrel.

The U.S. dollar fell to 148.27 Japanese yen from 148.69 yen. The euro slipped $1.0893 from $1.0905.

Source: AP

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Warren Takunda

Stocks

London stocks were set to fall at the open on Thursday as investors digested the latest policy announcement from the Federal Reserve and looked ahead to the Bank of England’s turn.

The FTSE 100 was called to open down around 20 points.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "US markets breathed a sigh a relief following the Federal Reserve (Fed) decision. The Fed kept its policy rate unchanged as expected, cut the growth forecast and lifted its inflation outlook quite notably but Chair Jerome Powell stressed out that the potential impact of tariffs on inflation would be ‘transitory’ - implying that the Fed could continue to ease policy to support growth. And more importantly, the Fed decided to reduce the pace of Quantitative Tightening (QT) - a move that eases the tightening of the financial conditions.

"As such, the Fed elegantly downplayed the long-term impact of rising inflation while cutting its growth forecast. The dot plot showed that the Fed officials continue to foresee two rate cuts on average this year, and activity on Fed funds futures now gives around 70% chance for the next cut to land in June. The decision was more dovish than expected."

The bank of England decision is due at midday, with no change to rates expected.

"Investors are feeling dovish regarding the upcoming BoE meeting given that the British growth numbers have taken a hit from the governments’ tax raising plans while the rising gilt yields decreased the spending potential," Ozkardeskaya said.

On the macro front, figures released earlier by the Office for National Statistics showed that the unemployment rate was unchanged in January, while wage growth slowed slightly.

The unemployment rate came in at 4.4%, unchanged from December, while total pay including bonuses rose 5.8% in the three months to January, down from 6.1% a month earlier.

Capital Economics said: "With the labour market cooling rather than collapsing and wage growth stuck in the 5.5-6.0% range, we doubt the Bank of England will cut interest rates from 4.50% today. The next cut will probably be in May and, ultimately, we think rates will be cut further than most expect."

In corporate news, Prudential hiked its dividend by 13% and accelerated its share buyback plan after profits rose by a tenth in 2024, with financial results in line with group guidance.

The insurance and asset management company returned $785m to shareholders in 2024, as part of its $2bn repurchase plan that will now complete by the end of 2025, ahead of the original mid-2026 schedule.

The firm reported an adjusted operating profit before tax of $3.13bn for 2024, up 10% on a constant currency basis.

Food company Cranswick upgraded medium-term targets and said the current year outlook was unchanged, with robust demand for its core pork and poultry products continuing throughout the fourth quarter.

The company said it was now aiming for mid single-digit organic revenue growth, 7.5% adjusted operating margin, increased from 6% and upper teens return on capital employed, up from mid-teens. Cranswick is still targeting mid single digit adjusted EPS growth.

Source: Sharecast

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Glendon

Cryptocurrency

Bitcoin (BTC) spiked to two-week highs on March 20 amid rumors that the US government was preparing a “major update” to its crypto policy.

BTC/USD 4-hour chart. Source: Cointelegraph/TradingView

Fed’s Powell injects relief into stocks, crypto

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reaching nearly $87,500 on Bitstamp.

Currently consolidating near $86,000, Bitcoin benefitted from a fairly cool Federal Reserve meeting the day prior in which officials opted to hold interest rates at current levels.

Policymakers confirmed that they envisage two cuts by the end of 2025, with Fed Chair Jerome Powell describing inflation as having “eased significantly.”

“We do not need to be in a hurry to adjust our policy stance, and we are well positioned to wait for greater clarity,” he said in an opening statement before a press conference that followed the rates decision.

A “wait-and-see” approach was enough to relieve troubled risk assets, with Bitcoin joining US stocks in surging and finishing the day higher. The S&P 500 ended up by around 1% for the March 20 session, adding $500 billion in market cap.

Reacting, Arthur Hayes, former CEO of crypto exchange BitMEX, suggested that the Fed had delivered a key signal for traders to add risk.

“JAYPOW delivered, QT basically over Apr 1. The next thing we need to get bulled up for realz is either SLR exemption and or a restart of QE,” he wrote in a characteristic X post, referring to officials rotating from quantitative tightening to quantitative easing.

“Was $BTC $77k the bottom, prob. But stonks prob have more pain left to fully convert Jay to team Trump so stay nimble and cashed up.”

S&P 500 1-day chart. Source: Cointelegraph/TradingView

Bitcoin traders eye US crypto announcement

Bitcoin traders nonetheless cared more about a potential change in US crypto posturing as whispers suggested that an announcement could come on March 21.

“This would be his first major update since March 6th, when the national crypto reserve was established,” trading resource The Kobeissi Letter summarized in an X post on the topic.

“Rumors state President Trump may be making a significant change to his strategy.”

When Trump signed an executive order to create a Strategic Bitcoin Reserve earlier this month, markets stayed surprisingly cool as it emerged that the plan would not necessarily involve the US buying BTC.

However, with the latest daily close above key resistance trend lines, cause for optimism was quickly returning.

“Bitcoin only needs to rally an additional +8% to position itself for a reclaim of the Range above and end this downside deviation,” popular trader and analyst Rekt Capital reported.

“Is that a lot, considering BTC is up almost +13% since last week's lows?”

BTC/USD 1-week chart. Source: Rekt Capital/X

Source: CryptoSlate

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Snb Shows Reluctance to Cut Again After Rate Hits 2 1/2-year Low

Source: Yahoo Finance

New Zealand Dollar is Dropping, Despite Genuine Good Economic News

Above: The NZD falls against GBP as Australian bond yields fall (lower panel). This confirms expectations for a quickening in rate cuts in Australia is weighing on NZD.

Source: Poundsterlinglive

Swiss National Bank Cuts Key Rate, Sees Low Inflationary Pressure

Source: Theedgemarkets

Morning Bid: Central Bank Baton Passes to Europe

Table displaying the most recent U.S. interest rate decisions made by the Federal Open Market Committee

Source: Reuters

Stock Market Today: Asian Shares Are Mostly Higher After Advance on Wall Street

London Pre-Open: Stocks Seen Down After Jobs Data, Ahead of BoE

Source: Sharecast

Bitcoin Price Tags 2-Week Highs As Markets Bet Big on Trump Crypto News

BTC/USD 4-hour chart. Source: Cointelegraph/TradingView

Fed’s Powell injects relief into stocks, crypto

S&P 500 1-day chart. Source: Cointelegraph/TradingView

Bitcoin traders eye US crypto announcement

BTC/USD 1-week chart. Source: Rekt Capital/X

Source: CryptoSlate

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