Swiss Central Bank Cuts Policy Rate To Lowest Since 2022

(RTTNews) - The Swiss National Bank trimmed its interest rate for the fifth consecutive meeting to the lowest since September 2022, amid heightened downside risks to inflation.

The policy board, led by President Martin Schlegel, lowered the policy rate by 25 basis points to 0.25 percent from 0.50 percent.

This followed a 50 basis point cut in December. The bank has reduced the key rate by 150 basis points since March 2024.

Banks' sight deposits held at the SNB will be remunerated at the policy rate up to a certain threshold, and at zero percent above this threshold.

The bank said it will continue to monitor the situation closely and adjust its monetary policy if necessary.

The bank repeatedly said that it remains willing to be active in the foreign exchange market as necessary, to ensure that inflation remains within the range consistent with price stability over the medium term.

The central bank forecast inflation at 0.4 percent in 2025, which was slightly up from 0.3 percent projected in December and retained its outlook for 2026 at 0.8 percent. The inflation rate is seen at 0.8 percent in 2027. The board observed that the outlook for the global economy is subject to high uncertainty largely due to trade policies. A more expansionary fiscal policy in Europe could provide stimulus to the economy in the medium term.

The domestic economy is projected to grow between 1 percent and 1.5 percent in the current year. Although domestic demand is likely to benefit from real wages, moderate economic growth abroad is set to dampen foreign trade.

For 2026, the SNB forecast economic growth of around 1.5 percent.

In the light of increased trade and geopolitical uncertainties, developments abroad continued to represent the main risk, the bank noted.

Today's rate cut is likely to be the last in the cycle, Capital Economics economist Adrian Prettejohn said.

The economist noted that slightly stronger underlying inflation data, together with the large announced fiscal package in Germany and the possible loosening of fiscal policy elsewhere in Europe, has decreased the likelihood of further cuts.