Swiss National Bank Cuts Interest Rate to 0%

The Swiss National Bank (SNB) announced today, Thursday, June 19, 2025, at 11:56 AM CEST, that it is cutting its key interest rate by 25 basis points to 0%, effective tomorrow, June 20, 2025. The decision comes as inflation has dropped to -0.1% in May from 0.3% in February, driven by lower global energy prices and a strong Swiss franc. The SNB says this move will help keep inflation within its 0% to 2% target range, with forecasts of 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027.

This is the sixth time the SNB has cut rates this year, following reductions of 25 basis points in March, June, and September 2024, 50 basis points in December 2024, and 25 basis points in March 2025. Earlier, the bank had raised rates from -0.75% in June 2022 to 1.75% to fight high inflation, which has now fallen significantly.

Switzerland’s economy grew by 1% to 1.5% in the first quarter of 2025, helped by exports to the U.S., but growth is expected to slow later this year. The SNB predicts similar growth for 2026, with a slight rise in unemployment. Globally, trade tensions are adding uncertainty, with U.S. inflation possibly increasing while Europe sees lower pressure.

The strong Swiss franc, seen as a safe choice during global uncertainty, is keeping import costs down but challenging the economy. The SNB is ready to step into foreign exchange markets if needed and will pay 0% on bank deposits up to a limit, with a 0.25% discount on extra reserves.

Economists had expected this cut, with markets seeing an 81% chance of a 25-basis-point reduction. Some worry the SNB might need to go back to negative rates if deflation continues, which could affect savers and banks. The SNB will keep a close eye on the situation and adjust as needed.