Swiss National Bank Holds Firm at 0% Amid U.S. Tariff Pressure
The Swiss National Bank (SNB) decided to keep its interest rate at 0%, citing the impact of U.S. tariffs on the Swiss economy. The tariffs, particularly affecting the machinery and watchmaking sectors, have dampened economic growth expectations to under 1% for 2026, with rising unemployment likely.
The Swiss National Bank maintained its key interest rate at zero, marking the first hold in seven meetings, due to rising U.S. tariffs imposed by President Trump that have dampened the Swiss economic outlook for 2026. This move was widely anticipated given recent inflation trends.
Swiss sectors like machinery and watchmaking face significant tariff challenges; however, impacts on services are limited. SNB indicated that these tariffs could depress both exports and investments, leading to a downgrade in Switzerland's growth forecast for 2026 to under 1%, alongside rising unemployment concerns.
Despite anticipated inflationary pressure, negative rates remain a possibility, as SNB Chairman Martin Schlegel hinted at the potential for future rate cuts if necessary. Analysts maintain a cautious outlook as inflation trends suggest further rate cuts might be required to ward off deflation.
(With inputs from agencies.)
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