Swiss National Bank Slashes Interest Rate to Zero Amid Economic Uncertainty
The Swiss National Bank cut its interest rate to zero in response to decreased inflation, pressure on the Swiss franc, and economic uncertainty from U.S. trade policy. This sixth consecutive rate cut aligns with decisions by other central banks, following the Federal Reserve's stance and European Central Bank's earlier action.
In an anticipated move, the Swiss National Bank (SNB) has slashed its interest rate to zero. This adjustment is a reaction to diminished inflationary pressures, challenges posed by the appreciating Swiss franc, and the anxious economic atmosphere stirred by the unpredictable trade policies of the U.S. administration.
This reduction, implemented by lowering the policy rate by 25 basis points from 0.25%, marks the sixth consecutive rate cut by the SNB since March 2024. The central bank now teeters on the verge of revisiting negative interest rates, a measure previously upheld from 2014 to 2022, albeit unpopular among stakeholders like banks, savers, and insurers.
Thursday proved busy for global central banks, as both the Bank of England and Norway's central bank prepared to reveal their interest rate decisions. Meanwhile, the U.S. Federal Reserve opted to maintain steady rates, hinting at potential reductions later in the year, just as the European Central Bank reduced its rate earlier this month. The SNB's decision followed a slide into negative inflation territory for Switzerland in May, missing the bank's stability target of 0-2%.
(With inputs from agencies.)
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