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Amid lowered inflation Switzerland cuts interest rates again, Britain holds steady

The Bank of England Thursday held interest rates steady at 5.25% while the Swiss National Bank cut rates by a quarter-point to 1.25%. Both nations have seen inflation drop, down to 2% in Britain and 1.4% in Switzerland. File photo by Andy Rain/EPA-EFE
The Bank of England Thursday held interest rates steady at 5.25% while the Swiss National Bank cut rates by a quarter-point to 1.25%. Both nations have seen inflation drop, down to 2% in Britain and 1.4% in Switzerland. File photo by Andy Rain/EPA-EFE

June 20 (UPI) -- Switzerland cut its interest rates for the second time this year and Britain held its rates steady as nations varied on responses to easing inflation.

The Swiss National Bank Thursday cut interest rates by 0.25 points to 1.25% as it said inflation had risen slightly from the previous monetary policy assessment and stood at 1.4% in May.

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"The underlying inflationary pressure has decreased again compared to the previous quarter. With today's lowering of the SNB policy rate, the SNB is able to maintain appropriate monetary conditions," the bank said. "The SNB will continue to monitor the development of inflation closely, and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term."

The SNB said that "inflationary pressure abroad" is likely to ease gradually over the next quarters, but that the scenario for the global economy "is still subject to significant risks."

SNB expects the global economy to pick up somewhat, but expects only moderate global growth in the long term.

Switzerland was the first major economy to cut interest rates with a quarter-point cut in March, citing a successful fight against inflation over the prior two and a half years.

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SNB said the renewed increase in geopolitical tensions could mean weaker global economic development.

The Bank of England held interest rates steady again Thursday at 5.25% as expected.

"Twelve-month CPI inflation fell to 2% in May from 3.2% in March, close to the May Monetary Policy Report projection," it said in a statement. "Indicators of short-term inflation expectations have also continued to moderate, particularly for households."

Britain's Office of National Statistics said Wednesday that inflation hit a 40-year high of 11.2% in October 2022, but fell to the target goal of 2% in May.

However, the bank said inflation is expected to rise slightly in the second half of 2024 "as declines in energy prices last year fall out of the annual comparison."

British GDP appears to have grown more strongly than expected, according to the Bank of England.

The bank's Monetary Policy Committee said interest rates will need to remain high until the inflation risk subsides.

"Monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term," the BoE said. "The Committee has judged since last autumn that monetary policy needs to be restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates."

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BoE said in August the Committee will review "for how long Bank Rate should be maintained at its current level."

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