SNB Has High Bar for Next Rate Cut, Schlegel Tells Migros-Magazin
(Bloomberg) — The Swiss National Bank is keeping a high bar for a return to negative borrowing costs because of their adverse impact on savers and pension funds, President Martin Schlegel said.
With the interest rate currently at zero, policymakers are set to deliver a quarterly decision later this month. Schlegel’s remarks to Migros-Magazin, a free publication for customers of a major Swiss supermarket chain, reiterated the central bank’s stance about going below the lower bound.
“We are aware that negative interest rates can have undesirable side effects, for example for savers and pension funds,” he said in interview published on Monday. “The hurdle to reintroducing them is high.”
Switzerland is gauging the fallout from US tariffs of 39%, which have amplified worries that growth in the export-dependent economy may suffer, further depressing already-low levels of consumer-price growth.
Money markets expect the SNB to keep its rate steady well into next year after inflation stayed positive in August for a third consecutive month. That kept it on track to meet or exceed the 0.1% average for the quarter predicted by officials at their last decision in June.
The SNB chief echoed earlier comments that officials haven’t been too quick to bring interest rates down to zero in a cycle of cuts that started in March 2024, leaving them with less room now to further cushion the economy from President Donald Trump’s levies.
“In monetary policy, you can’t wait around when a decision needs to be made,” he said. “Otherwise you have to take stronger countermeasures later on.”
Schlegel added that, while individual companies will likely be severely affected by tariffs, the overall impact remains to be seen.
They will “initially create a lot of uncertainty,” he said. “Many companies are investing less, which is having a negative impact on the economy.”
Last month, UBS Group AG cut its growth forecast for next year. Companies are increasingly considering job cuts and relocating production amid a worsening manufacturing slump.
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