Swiss National Bank Cuts Interest Rate to 0.25%, Citing Low Inflation and Increased Economic Uncertainty

The Swiss National Bank (SNB) has lowered its key interest rate for the fifth consecutive time, reducing it by 25 basis points to 0.25%. This decision, widely anticipated by economists, reflects concerns over weak inflationary pressure and heightened downside risks to inflation. In a press release, the SNB stated that the economic outlook for Switzerland has become considerably more uncertain, citing increased trade and geopolitical uncertainties worldwide as key risks. The central bank will continue to monitor the situation closely and adjust its monetary policy as needed to ensure inflation remains within the 0-2% price stability range. The SNB's new conditional inflation forecast projects inflation to average 0.4% in 2025 and 0.8% in both 2026 and 2027, assuming the policy rate remains at 0.25%. GDP is expected to grow between 1% and 1.5% in 2025, with domestic demand supported by rising real wages and easier monetary conditions, while weak external demand is expected to weigh on growth. The SNB anticipates GDP growth of around 1.5% for 2026.