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SNB surprises with interest rate decision: key interest rate reduced to 0%!
The SNB cuts the key interest rate to 0%, despite negative expectations. US Federal Reserve keeps interest rates stable. Economic development remains uncertain.
SNB surprises with interest rate decision: key interest rate reduced to 0%!
On June 19, 2025, the Swiss National Bank (SNB) cut the key interest rate by 25 basis points to 0%. This decision surprised many market participants who had expected the introduction of negative interest rates. However, the SNB does not consider negative interest rates to be appropriate in the current economic environment economiesuisse reported.
The SNB's current assessment of the situation reflects the economic forecast from economiesuisse. In May 2023, prices were slightly below the previous year's prices, with a decrease of 0.1%. Deflationary pressure is primarily due to falling energy and oil prices, while core inflation, which excludes energy prices, is close to 1%, thus remaining within the SNB's target range.
Interactions with the global economy
The SNB aims to prevent further downward risks in prices and has therefore deliberately avoided negative interest rates. For 2025, it expects average inflation of just 0.2% and price increases of less than 1% for 2026 and 2027. However, the global economic environment remains tense, characterized by trade and geopolitical conflicts. This includes uncertainties regarding tariffs in the USA, which have a negative impact on corporate planning.
In addition, a reorganization of procurement for Swiss companies could lead to higher imported inflation. An ongoing conflict between Israel and Iran has also recently caused oil prices to rise, which could have inflationary effects on international prices. This all shows that the SNB is operating in a turbulent environment and is leaving all options open, including the possibility of negative interest rates and foreign currency purchases.
The US Federal Reserve's interest rate decision
The Fed's decision, which will be announced at 8:00 p.m. (CEST), is crucial to combating inflation and securing the labor market. A stable key interest rate has far-reaching consequences for loan interest rates for both consumers and companies. Trump argues that lower interest rates are necessary to stimulate the economy, while the Fed justifies maintaining the key interest rate with an inflation rate close to the target of 2 percent and a robust situation in the labor market.
In summary, both the SNB and the Fed have to respond in their interest rate decisions to a complex and uncertain economic environment that is influenced by numerous external factors. A common theme is the influence of geopolitical risks, particularly those related to Iran and Israel, on the economic situation.