Anticipated Swiss Interest Rate Decreases Due to Zero Inflation Levels
In June 2019, Swiss inflation found a standstill, marking the lowest inflation in four years and right at the edge of the Swiss National Bank's (SNB) target range for price stability (0-2%). As expected inflation declined more than anticipated with a 0.2% drop, economists are almost certain the SNB will slash interest rates.
Markets are almost positive about an interest rate cut, pricing a 99% probability. However, the SNB remained tight-lipped about the inflation statistics. Economist GianLuigi Mandruzzato from Bank EFG International predicts a reduction in the policy rate by at least 25 basis points, and the SNB may also weaken the franc through foreign currency purchases.
SNB had trimmed interest rates down to 0.25% in March, and President Martin Schlegel mentioned that the SNB would dip into negative territory if required to secure price stability, even in the face of Donald Trump's trade wars. Schlegel cautioned about a slowdown in Swiss growth recently. With the decision upon the policy interest rates happening four times per year, the SNB will deliberate again on June 19 for monetary policy assessments.
Though in 2019, the SNB did not lower the interest rates like expected, for more recent trends, analysts eye a possible interest rate cut to 0% in June 2025, because of low inflation and weaker economic activity, according to economists [3]. However, in June 2019, no official rate cut announcement was made by the SNB.
(Reporting by Paul Arnold and John Revill, editing by Christian Goetz. Any additional questions, please contact our newsroom at [email protected] (politics and economics) or [email protected] (for companies and markets).)
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In June 2019, the Swiss National Bank (SNB) kept silence about further reduction in interest rates despite a drop in inflation, as predicted by economists. The SNB's tight-lipped approach about the inflation statistics might suggest they are not yet ready to make an official rate cut. Analysts, however, anticipate a possible interest rate cut to 0% in June 2025 due to low inflation and weaker economic activity in Switzerland.
