Swiss National Bank cuts interest rates to zero
The Swiss National Bank cut its interest rate to zero today in response to falling inflation, appreciation pressure on the Swiss franc and economic uncertainty caused by the US administration’s unpredictable trade policy.
The SNB reduced its policy rate by 25 basis points from 0.25%, as expected by markets and a Reuters poll.
It was the central bank’s sixth rate cut in succession after it started reducing borrowing costs in March 2024.
The central bank now stands on the brink of returning to negative interest rates, a policy it maintained from 2014 to 2022 but which was unpopular with banks, savers and insurance companies.
“Inflationary pressure has decreased compared to the previous quarter. With today’s easing of monetary policy, the SNB is countering the lower inflationary pressure,” the SNB said today.
The SNB’s move comes on a busy day for central banks, with the Bank of England and Norway’s central bank also due to announce their rate decisions today.
The US Federal Reserve held its interest rates steady last night and signalled borrowing costs could fall later this year, while the European Central Bank trimmed its interest rate by 25 basis points earlier this month.
The SNB’s rate cut came after Swiss annual inflation in May turned negative for the first time in four years, missing the central bank’s 0-2% target range it equates with price stability
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