ST GALLEN (Switzerland): The Swiss National Bank was able to lower its benchmark interest rate last week because inflation pressure has declined, Vice Chairman Martin Schlegel said on Wednesday.

The SNB last week became the first major central bank to cut interest rates, reducing its policy rate to 1.5%. It also lowered its inflation forecasts, saying it now expects price rises of 1.4% for 2024, 1.2% for 2025 and 1.1% for 2026.

“The lower inflation pressure has allowed us to reduce interest rates to 1.5% from 1.75%,” Schlegel told an event in the northeastern city of St. Gallen.

Had the SNB not cut its key rate by 25 basis points, its inflation forecasts would have been lower, he added.

The cut - the first by the SNB in nine years - came after inflation eased to 1.2% in February, the ninth month in a row the rate was within the central bank’s target range of 0-2%.

The SNB has also used the strength of the Swiss franc to shield Switzerland from inflation by making imports cheaper.