European markets close higher; Swiss central bank holds interest rate at 0% as inflation cools

 European stocks finished higher on Thursday as investors digest the U.S. Federal Reserve’s latest rate cut and Swiss central bank’s decision to hold rates.

The pan-European Stoxx 600 closed 0.5% higher, with most sectors and bourses ending the session in positive territory.

Switzerland’s central bank published its latest monetary policy decision on Thursday and left rates unchanged at 0% citing inflation coming in slightly lower than expected.

Global economic growth was stronger than expected in the third quarter, the Swiss National Bank said in a statement, nothing that “US tariffs and trade policy uncertainty weighed on the global economy, economic development in many countries has thus far remained more resilient than had been assumed.”

Setting interest rates has become a delicate balancing act for SNB policymakers, as they try to avoid implementing negative interest rates despite the country edging toward disinflation territory.

Swiss inflation fell back to 0% in November, with rising demand for the Swiss franc — widely seen as a safe haven asset — putting deflationary pressure on the export-driven economy this year.

The country is also reeling from being temporarily hit with some of the Trump administration’s highest “reciprocal” tariffs over the summer. While Switzerland made a deal with the U.S. last month to lower its tariff rate to 15%, Swiss officials warned in October that the higher rate of 39% — which came into effect in August — was placing a “heavy burden” on some of Switzerland’s key sectors.

It comes as global markets react to the Fed’s third interest rate cut of the year yesterday. The U.S. central bank trimmed the Federal Funds rate by 25 basis points to 3.5%-3.75% but signaled a tougher road ahead for further reductions.

Fed Chair Jerome Powell, at his post-meeting news conference, said the reduction puts the Fed in a comfortable position as far as rates go.

“We are well-positioned to wait and see how the economy evolves,” Powell said, noting that President Donald Trump’s tariffs had fueled inflation.