Switzerland’s central bank cut its key interest rate by 0.25 percentage points on Thursday, lowering it from 0.25% to zero. This marks the sixth consecutive rate cut since March 2024, reflecting easing inflation pressures in the country.
The Swiss National Bank (SNB) said inflation in Switzerland has dropped, even turning slightly negative in May compared to February. The decline is mainly due to falling prices in tourism and oil sectors.
The SNB now expects inflation to average 0.2% in 2025, rising modestly to 0.5% in 2026 and 0.7% in 2027, assuming the interest rate stays at zero during this period.
The SNB also noted that global economic growth is expected to slow in the coming months. Inflation in the U.S. is likely to increase, while Europe may see further easing of inflationary pressures. Switzerland’s economy grew strongly in the first quarter, helped by increased exports to the U.S. as companies anticipated future tariffs.
This rate cut aims to counter falling inflation and the appreciating Swiss franc amid global uncertainties, including trade tensions and political instability in the Middle East. The SNB remains ready to intervene in foreign exchange markets if needed to maintain price stability.
Meanwhile, the U.S. Federal Reserve kept its rates unchanged recently, awaiting more data on the impact of tariffs and other disruptions. U.S. President Donald Trump has urged the Fed to lower rates to stimulate the economy.
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