Swiss National Bank Cuts Interest Rate to Zero Amid Global Economic Uncertainty

The Swiss National Bank (SNB) announced a significant monetary policy shift on Thursday, slashing its interest rate to zero. This decision came as a response to declining inflation rates, a strengthening Swiss franc, and the unpredictable trade policies of the U.S. administration that have fueled economic uncertainties.

In a historic move, the SNB reduced its policy rate by 25 basis points from 0.25%, aligning with market expectations. This reduction is part of a series of actions the central bank has undertaken since March 2024. Should current economic conditions persist, the SNB could consider returning to negative interest rates, a controversial policy that has had mixed reception among banks and financial institutions.

SNB Chairman Martin Schlegel indicated that lower-than-expected inflation and subdued price pressures motivated the rate reduction. Meanwhile, the central bank remains vigilant, prepared to introduce further measures if global economic conditions further weaken. Notably, the decision came amid activity from other central banks, underscoring a global trend toward easing monetary policies.

(With inputs from agencies.)