FX.co ★ SNB Lowers Interest Rate to Zero

The Swiss National Bank (SNB) reduced its policy rate by 25 basis points to 0% in June 2025, as anticipated. This marks the first instance of zero borrowing costs since the conclusion of negative rates in late 2022. The decision was influenced by decreasing inflationary pressures and a subdued global economic outlook. In May, Swiss consumer prices decreased by 0.1%, the first decline in four years, primarily due to reduced prices in tourism and oil products. The SNB now forecasts an average inflation rate of 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027. The Swiss GDP exhibited robust growth in the first quarter of 2025, partly aided by advance exports to the US in anticipation of new tariffs, although the underlying momentum was more restrained. Growth is predicted to decelerate in the upcoming quarters, with GDP expansion projected to range between 1% and 1.5% for both 2025 and 2026. Concurrently, the global economic outlook has worsened due to escalating trade tensions, introducing additional uncertainty to Switzerland’s trade prospects.