The Swiss National Bank (SNB) cut interest rates by 50 basis points on Thursday, the biggest cut in almost 10 years, as it seeks to pre-empt upcoming cuts by the European Central Bank today and other central banks to limit a possible strengthening of the Swiss franc.

Notably, the SNB cut interest rates from 1.0% to 0.5%, the lowest level since November 2022. While markets had anticipated the move, more than 85% of economists polled by Reuters they expected a smaller decline of 25 basis points.

It is the biggest rate cut since January 2015, when it surprised markets by removing the minimum exchange rate with the euro.

“Underlying inflationary pressures eased again this quarter. The easing of monetary policy by the SNB takes this development into account”the SNB reported. “The SNB will continue to closely monitor the situation and adjust its monetary policy if necessary to ensure that inflation remains within the range consistent with price stability over the medium term.”

Thursday’s decision was the first under new SNB president Martin Schlegel, and is an acceleration from the policy of his predecessor Thomas Jordan, who oversaw three 25 basis point cuts this year.

Swiss inflation stood at 0.7% in November, well within the SNB’s 0-2% target range.

The European Central Bank is also expected to cut interest rates later on Thursday as is the US Federal Reserve (Fed) on December 18.

Meanwhile, the Bank of Canada cut interest rates by 50 basis points on Wednesday.

A narrowing of the interest rate differential between Switzerland and other countries increases the appeal of the safe-haven franc, strengthening the currency.

The appreciation of the franc is an added headache for Swiss exporters, making their exports more expensive when they already face sluggish demand in Europe and China.

The SNB now expects growth of between 1% and 1.5% for 2025 in Switzerland. It previously forecast 1.5% for next year.

The central bank expects inflation to remain within its target range. For 2024, the SNB sees inflation rising by 1.1%, by 0.3% in 2025 and by 0.8% in 2026, compared to its previous forecast of 1.2% inflation this year, 0.6% in 2025 and 0.7% in 2026.

The Swiss franc fell after a bigger-than-expected interest rate cut by the central bank, a move analysts say is expected to curb the currency’s appreciation in the coming months. The franc weakened as much as 0.7 percent to 0.9344 per euro, its weakest level in more than two weeks, further retreating from its strongest level in nearly a decade hit last month.