Swiss National Bank keeps key interest rate at zero

The economic outlook for Switzerland remains uncertain, the Swiss National Bank said on Thursday. Keystone-SDA

The Swiss National Bank (SNB) is taking a break from interest rates. After six consecutive interest rate cuts, the key interest rate will remain at 0.00%, the SNB announced on Thursday.

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Inflationary pressure is practically unchanged compared to the previous quarter, the SNB wrote in a statement. The SNB will continue to monitor the situation closely and adjust its monetary policy if necessary to ensure price stability.

However, the economic outlook for Switzerland remains uncertain, the central bank said. The significantly higher tariffs imposed by the United States in August in particular have clouded the outlook. The main risks for the Swiss economy therefore remain US trade policy and the development of the global economy.

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The SNB’s latest decision comes as no surprise. The vast majority of economists had expected this in advance.

Prior to this, the SNB had cut the key interest rate six times in a row. It cut it by 25 basis points in March, June and September 2024, by 50 basis points last December and then again by 25 basis points in March and June.

The central bank had previously raised the key interest rate from -0.75% in June 2022 to 1.75% in just five steps. The reason for this was the sharp rise in inflation, which has since fallen again significantly and even slipped into negative territory in the meantime.

Uncertainties ‘remain high’

The 39% tariffs imposed by the US on Swiss exports “represent a major difficulty” for Swiss companies, warned Martin Schlegel, the SNB chair.

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These duties, which have been in force since August 7, “should slow down activity”, Schlegel added. In this context, and by keeping its key rate at zero, the SNB is “supporting […] the economy” with a monetary policy that remains “expansionary”, he said.

But the uncertainties surrounding inflation and economic growth in Switzerland “remain high”, said the head of the Swiss central bank. The bank will adapt its monetary policy “if necessary” and will remain “ready to be active on the foreign exchange market if required”.

Translated from German with DeepL/gw

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