SNB Cuts Rate to Zero, Signals Possible Negatives

The Swiss National Bank (SNB) has cut its key policy rate by 25 basis points to 0%, marking its sixth consecutive reduction since March 2024 and returning rates to zero for the first time since late 2022. This decision aims to address declining inflation and deflationary pressures, with consumer prices falling below zero in May 2025. The SNB is maintaining a tiered remuneration system for banks’ sight deposits, which now effectively reintroduces negative rates on reserves above a certain threshold. Swiss GDP growth is projected at 1–1.5% for both 2025 and 2026, with inflation forecasts revised downward. The SNB cites persistent global economic uncertainties, including increased trade tensions, as ongoing risks. Market expectations include the possibility of further rate cuts, potentially into negative territory, if disinflation continues.