The Swiss National Bank (SNB) has cut interest rates by another 25 basis points to 0%, adding to concerns over a potential return to negative rates. The move is widely expected and is seen as a response to the country’s deflationary pressures.
Switzerland’s inflation turned negative in May, with prices falling 0.1% from a year earlier. This trend has been driven by the strength of the Swiss franc, which is a key contributor to low inflation.
The SNB said that it will continue to monitor the situation closely and adjust its monetary policy if necessary, to ensure that inflation remains within the range consistent with price stability over the medium term. The central bank expects inflation to average 0.2% this year and 0.5% in 2026.
However, deflation is a concern for Switzerland, which has seen several periods of low inflation in recent years. The country’s currency, the Swiss franc, continues to appreciate, pushing down the price of imported products and contributing to deflation.
The SNB is taking steps to constrain the strength of the franc by keeping interest rates lower than elsewhere. This move is seen as a risk to savers and banks, which may see their returns on savings and loans reduced.
Despite this, some experts expect the SNB to cut interest rates further in the future, potentially even to negative levels. The central bank’s next interest rate decision is scheduled for September, and it will be closely watched by markets and investors.
Source: https://www.cnbc.com/2025/06/19/switzerland-returns-to-era-of-zero-interest-rates.html