The Swiss National Bank said Thursday it has lowered its main policy rate by a quarter of a percentage point, citing a drop in “underlying inflationary pressure” despite an uptick in some costs like rents, tourism services and oil products.

The central bank became the first among counterparts in major financial centers this spring to cut interest rates, with a similar quarter-point reduction in March that caught many market watchers by surprise.

The reduction to 1.25%, from 1.5%, will take effect on Friday, the SNB said in a statement, noting that inflation in Switzerland is currently “being driven above all by higher prices for domestic services.”

For months, major central banks had been tightening monetary policy to ward off inflation pressures by making the cost of borrowing more expensive, which can cool economic activity and thus rein in upward pressure on prices.

“Global economic growth was solid in the first quarter of 2024,” the SNB said. “Inflation largely moved sideways over the past months, and remained above central banks' targets in many countries. However, the underlying inflationary pressure continued to decrease slightly.”

It noted that some other central banks have also eased monetary policy recently after a tightening cycle over the last two years. The Swiss bank said inflation could stay high in some countries and “geopolitical tensions” could crimp economic activity around the world.