Swiss National Bank Cuts Key Rate, Sees Low Inflationary Pressure

Economic

Forex

Summary:

ZURICH (March 20): The Swiss National Bank cut its policy interest rate by 25 basis points on Thursday, leaving borrowing costs

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

To stay updated on all economic events of today, please check out our Economic calendar

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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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Michelle

Economic

Forex

Central Bank

In focus today

Today we receive rate decisions from the Bank of England (BoE), the Swiss National Bank (SNB) and the Riksbank.

We expect the BoE will keep the Bank Rate unchanged at 4.50% in line with consensus and market pricing. Additionally, we anticipate the BoE will stick to its previous guidance noting that “a gradual approach to removing monetary policy restraint remains appropriate”.

For the SNB, we expect they will cut the policy rate by 25bp to 0.25% as inflation pressures remain muted, hovering in the lower end of the target range. Markets also favour a cut, pricing in roughly 20bp for the meeting.

We think the Riksbank will stay on hold at 2.25% and present a completely flat rate path, which is widely expected. However, we believe the risk is more likely to lean towards a dovish surprise rather than a hawkish one, considering that market pricing is slightly inclined towards the next move being a rate hike.

Norges Bank will release the Regional Survey today. We will keep an eye on the growth prospects for both Q1 and Q2. Based on leading indicators, we expect the expectations to be around 0.3-0.4% q/q, which should be well in line with Norges Bank’s forecast from the December MPR. But we will put more emphasis on the capacity metrics this time around, as they are paramount for the inflation and hence rate outlook in the medium turn. This could prove decisive ahead of the monetary policy meeting next week after the latest inflation numbers.

Economic and market news

What happened overnight

In China, the People’s Bank of China kept Loan Prime Rate 1Y and 5Y steady at 3.10% and 3.60% respectively. This was widely anticipated by markets and the market reaction was muted. Economic data on the Chinese economy at the start of the year was a mixed bag.

What happened yesterday

In the US, the FOMC meeting in the evening concluded with an unchanged rate decision from the Fed as widely expected. Powell sent a message as balanced as it could be. Not downplaying any downside risks but also emphasising that the Fed is not in a hurry to move. Markets reacted with lower rates, weaker USD and stronger equities. We maintain our call for the next cut in June, and a total of three cuts this year. Read more in our Fed review: Cautious stability, 19 March.

In Ukraine, the call between President Zelenskiy and President Trump was spent aligning both Russia and Ukraine in terms of their requests. We see the latest developments, namely the outcome from the Zelenskyi-Trump call yesterday, as positive for Ukraine, and for the broader long-term security in Europe. The White House is now saying their focus has shifted from the minerals deal to discussing the long-term peace deal. The limited ceasefire now seems possible in our view, but the road to a sustainable peace is still a long and rocky one, not least because there is no consensus on any credible security guarantees for Ukraine.

Equities: Global equities ended higher yesterday, with the US leading advances, closing near the day’s high and interpreting the Fed’s message rather positively. With the VIX ticking lower, cyclicals outperforming alongside small caps, and positive stories surrounding the MAG 7, we are likely seeing more US retail investors engaging in the buy-the-dip strategy.

In Europe, there was a slight “sell the fact” movement, with Germany lagging behind after its stellar performance, where the DAX is up 17% year-to-date. In the US yesterday: Dow +0.9%, S&P 500 +1.1%, Nasdaq +1.4%, Russell 2000 +1.6%.

Asian markets are split this morning, with both China and Japan being lower, while most other markets are higher.

European futures are unchanged (DAX slightly lower), while US futures are higher, led by the tech sector, not least due to the ambitious investment stories circulating around Nvidia.

FI&FX: This week’s bunch of central bank decisions kicked off with the BoJ and the Fed yesterday – both held interest rates unchanged. USD/JPY did not move on the BoJ decision but fell below 149 after US interest rates dropped in response to the slight dovish signals from the Fed. EUR/USD was steady around the 1.09 level. EUR/SEK rose above the 11.00 level again ahead of the Riksbank rate decision today.

Source: ACTIONFOREX

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Glendon

Cryptocurrency

According to a recent update by SoSovalue as of March 18, the daily total net inflow reached $209.12 million, while the cumulative total net inflow stood at $35.79 billion. The total value traded amounted to $2.12 billion, and total net assets were recorded at $91.97 billion, representing 5.65% of Bitcoin’s market capitalization.

BlackRock’s IBIT ETF Leads with $218M Inflow

The IBIT ETF on NASDAQ, sponsored by BlackRock, had a one-day net inflow of $218.12 million, with cumulative inflows of $39.50 billion. Its net assets reached $46.79 billion, representing a 2.87% share of Bitcoin’s market cap. The ETF’s market price stood at $48.61, with a daily increase of 3.85%. Fidelity’s FBTC ETF, listed on CBOE, reported no new net inflows, maintaining cumulative inflows of $11.37 billion.

Grayscale’s GBTC ETF, listed on NYSE, also recorded no new inflows, keeping cumulative net inflows at negative $22.50 billion. Its net assets were valued at $15.95 billion, with a market price of $67.59, reflecting a 3.86% daily gain.

ARKB, listed on CBOE and sponsored by Ark Invest, experienced a one-day net outflow of $9 million. Its cumulative net inflow stood at $2.67 billion, with net assets of $3.97 billion. The ETF’s market price reached $85.27, posting a 3.82% daily gain.

Grayscale, Bitwise, VanEck, and Valkyrie ETFs Hold Steady

Grayscale’s BTC ETF on NYSE recorded no inflows, maintaining cumulative inflows at $1.11 billion. Its net assets stood at $3.33 billion, with a market price of $37.89 and a 4.01% daily increase. Bitwise’s BITB ETF showed no inflows, keeping cumulative inflows at $2.03 billion. Net assets stood at $3.15 billion, with a market price of $46.55 and a 3.91% increase.

VanEck’s HODL ETF on CBOE had no new inflows, holding cumulative inflows at $832.40 million. Its net assets reached $1.15 billion, with a market price of $24.18 and a 3.78% increase. Valkyrie’s BRRR ETF on NASDAQ had no inflows, maintaining cumulative inflows at $314.30 million. Its net assets were $497.46 million, with a market price of $24.17 and a 3.87% daily gain.