Swiss Inflation Slows to Four-Month Low Raising Central Bank Rate Cut Speculation

Switzerland's consumer prices showed a third consecutive monthly decline in October 2025, with inflation slowing to a 0.1% year-on-year increase, well below market expectations and the lowest since June. Key price drops included clothing, footwear, household goods, transport, and recreation, while alcoholic beverages, tobacco, education, and hospitality prices remained steady or rose slightly. This unexpected slowdown in inflation has intensified speculation that the Swiss National Bank (SNB) may reintroduce negative interest rates to counter deflationary pressures and stimulate price growth. The SNB faces challenges from the strong Swiss franc, which has appreciated near decade-highs against the euro and dollar, reducing import costs and curbing inflation. Core inflation also eased, despite SNB officials' expectations of rising inflation in late 2025 and into 2026, putting pressure on policymakers to consider more aggressive measures such as foreign-exchange interventions or rate cuts below zero. The continued low inflation levels and currency dynamics highlight the delicate balance the SNB must manage to meet its inflation targets and support economic stability.