The Swiss National Bank cut its main interest rate to just above zero on Thursday, saying inflationary pressures were well contained despite increased uncertainty over the global impact of U.S. President Donald Trump's trade policies.
The SNB reduced its key rate by a quarter point to 0.25%, its fifth successive cut since it started lowering borrowing costs in March 2024, matching economists' forecasts, with several now expecting rates to stay on hold for the time being.
The Swiss franc weakened slightly against both the euro and the dollar after the decision. The franc was last flat at 0.95705 against the euro , having traded around 0.9537 earlier, and at 0.8803 to the dollar , which was up 0.4% on the day.
"The SNB was not only the first big central bank to have started cutting rates in this cycle, with this step today, it likely is also the first one to have finished cutting rates," said Karsten Junius, chief economist at Bank J Safra Sarasin.
"The upward revisions of inflation profile indicate that no further rate cut is needed."
The decision comes on a busy day for central banks, with the Bank of England and Sweden's central bank also due to announce their policy decisions on Thursday.
The U.S. Federal Reserve on Wednesday held interest rates steady, citing a period of "unusually elevated" uncertainty linked to Trump's initial policies, including tariffs, which it said could both dampen growth and lead to higher inflation.
Swiss National Bank Chairman Martin Schlegel said uncertainty about the prospects for the global economy and inflation had increased significantly.
"As a result, the outlook for inflation in Switzerland too is currently very uncertain. At present, the risks are predominantly to downside," he said after the rate decision.
The new 0.25% rate is the SNB's lowest since September 2022, and brings it close to sub-zero interest rates again, a move it has previously not ruled out.
In its statement, the central bank said the decision meant monetary conditions remain appropriate "given the low inflationary pressure and the heightened downside risks to inflation."
GROWTH UNCERTAINTY
The cut aims at preventing a further decline in Swiss inflation, which eased to 0.3% in February, its lowest level in nearly four years, and keeping it within the 0-2% target range which the central bank defines as price stability.
The SNB said that its baseline scenario anticipated moderate global growth over the coming quarters and gradually easing underlying inflationary pressure, particularly in Europe.
It warned, however, that this scenario for the global economy is currently subject to high uncertainty.
"The situation could change rapidly and markedly, particularly from a trade and geopolitical perspective. For example, increasing trade barriers could lead to weaker global economic development," it said.
"At the same time, a more expansionary fiscal policy in Europe could provide stimulus to the economy in the medium term."
The SNB kept its expectations for Swiss economic growth at 1-1.5% for 2025. For 2026, it sees growth of about 1.5%.
Still, SNB governing board member Petra Tschudin said after the rate decision that the economic outlook for Switzerland was now "considerably more uncertain."
On inflation, the SNB now expects prices to rise by 0.4% this year, 0.8% in 2026 and 0.8% in 2027. It had previously forecast average inflation of 0.3% in 2025 and 0.8% next year.
