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SNB: 25bp Rate Cut To 0.25% (Consensus 0.25%) in Mar-25

• The SNB lowered its policy rate by 25bps to 0.25%, in line with expectations, citing low inflation and downside risks to price stability. Inflation is projected to remain within the central bank’s target range, reducing the need for aggressive monetary easing.
• Switzerland’s economy remains resilient, with solid Q4 2024 growth, but global uncertainties—including geopolitical tensions and trade risks—could pose challenges. Domestic demand is expected to benefit from rising real wages, while weak foreign trade may dampen overall growth.
• Future policy decisions will be data-dependent, with the SNB closely monitoring inflation and external conditions. While further easing is possible, ongoing global inflationary pressures and fiscal stimulus in Europe could influence the central bank’s stance.

EA Inflation Shrunk For Spring 2025

• Eurostat shrunk the final Euro area inflation print for February by 5bp, rounding it down to 2.3% after German revisions, reversing the upward surprise from the flash release.
• French energy utility prices drove this decline, and petrol prices seem set to drag it down further in March. However, the median impulse is also relatively subdued.
• ECB policy is unlikely to be affected by this revision and the temporary impact of energy prices on inflation. We still expect it to hold rates in April before a final cut in June.

By Philip Rush

Indonesia: Policy Rate Held At 5.75% (Consensus 5.75%) in Mar-25

• Bank Indonesia held the BI-Rate at 5.75%, consistent with market expectations, as inflation remains subdued and global uncertainty persists.
• The trade surplus and strong foreign exchange reserves provide resilience, though capital flows remain volatile amid shifting global risk sentiment.
• The central bank maintains a cautious easing bias, with future rate adjustments contingent on inflation trends, Rupiah stability, and global financial market conditions.

Japan: Policy Rate Held At 0.5% (Consensus 0.5%) in Mar-25

• The Bank of Japan held its uncollateralised overnight call rate at around 0.5%, in line with expectations, reflecting a moderate economic recovery and sustained inflationary pressures.
• Core CPI inflation remains at 3.0-3.5% year-on-year, with underlying inflation expected to gradually rise towards the BoJ’s target by 2025, driven by a tightening labour market and wage-price dynamics.
• The BoJ remains data-dependent, with policy direction contingent on wage growth sustainability, yen depreciation effects, and global economic risks, suggesting a cautious approach to normalisation.