Swiss Inflation Risks Falling Below Zero in Individual Months This Year, Schlegel Says

(Bloomberg) —

Switzerland’s inflation rate may fall below zero at times in 2025, according to central bank chief Martin Schlegel.

“For this year, inflation in certain months can be negative,” the Swiss National Bank president said on Monday. “We always focus on the medium term. That means that in the short run, inflation can also be below zero or above 2%.”

Speaking at the University of Lucerne, he said that “the inflation outlook is very uncertain,” adding that “uncertainty stemming from tariffs is particularly large.”

Annual consumer prices in Switzerland slowed to zero in April, with Schlegel saying that while domestic services are still a driver, the “foreign contribution is negative.”

That’s because the franc — sought by investors as a haven in times of uncertainty — is weighing on prices by making imports cheaper. 

Schlegel’s comments come as Swiss officials near their next monetary-policy decision on June 19, at which the SNB is expected to become the first central bank to cut borrowing costs to zero again after the phase of low and subzero rates that followed the 2008 crisis.

The SNB president wouldn’t comment on what might happen next month, but highlighted that Switzerland’s “interest rate has a large influence on the exchange rate.”

He also renewed his institution’s commitment to take its benchmark into negative territory if required and said that while interest rates are the SNB’s main tool, other instruments including interventions in foreign-currency markets can also be used.

Schlegel also said:

• “We expect that Swiss growth this year will be lower than expected a few weeks ago.”
• Because of tariffs “currently the situation is very challenging for some companies.”
• “We see a postponement of investments.”

• “At the same time, gold doesn’t yield interest, so a too high share of gold on the balance sheet is not necessarily advantageous.”

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