Swiss National Bank cuts policy rate to 0% as inflation retreats

The Swiss National Bank (SNB) has lowered its key policy rate by 25 basis points to 0%, matching market expectations. The new rate will take effect from June 20, 2025. The central bank also reiterated its readiness to intervene in the foreign exchange market if necessary.

The SNB explained that inflationary pressure has eased further compared to the previous quarter, prompting today’s monetary easing to counter this decline. Inflation dropped from 0.3% in February to -0.1% in May, mainly due to falling prices in the tourism sector and lower oil product costs.

The central bank’s new conditional inflation forecast is slightly lower in the short term compared to March but remains broadly unchanged over the medium term. Annual inflation is now projected at 0.2% for 2025, 0.5% for 2026 and 0.7% for 2027, assuming the policy rate stays at 0% throughout the forecast horizon. Without today’s rate cut, the forecast would have been lower.

“The degree of uncertainty surrounding the global economic outlook remains high,” the SNB noted, citing potential increases in trade barriers and possible stronger-than-expected fiscal support as factors that could affect growth.

After a strong first quarter, Swiss GDP growth is expected to slow and remain moderate for the rest of the year. For 2025 as a whole, the SNB forecasts GDP growth between 1% and 1.5%, with a similar range anticipated for 2026. Unemployment is expected to edge up slightly.

“The economic outlook for Switzerland remains uncertain. The main source of risk continues to be developments at the international level,” the central bank warned.