Swiss National Bank Holds Rates as Trump’s Tariffs Hit Exporters
The Swiss National Bank (SNB) has ended its streak of consecutive rate cuts, keeping its policy rate at 0% in Thursday’s decision.
It’s the first time in seven meetings that officials have chosen not to ease further, a pause that comes as Switzerland grapples with new trade tensions triggered by Washington.
Tariffs Cloud Growth Outlook
Last month, President Trump imposed a 39% levy on Swiss exports, prompting Bern to suspend shipments to the United States. The move has put pressure on the country’s prized export industries, particularly machinery and watchmaking. SNB leaders warned that the higher trade barriers are likely to weigh on both exports and investment, trimming their 2026 growth forecast to below 1%, down from an earlier projection of 1–1.5%.
Vice President Martin Schlegel described the tariffs as a “big problem” for companies reliant on U.S. sales, though he stressed that the wider economy remains resilient. “For those directly affected, this is very challenging,” he said in a CNBC interview, but added that Switzerland does not expect a recession in 2025.
Inflation Gives Bank Breathing Room
Part of the bank’s reasoning for holding steady was a modest uptick in consumer prices. Inflation, which had dipped into negative territory earlier this year, is now back within the SNB’s 0–2% target range. Officials expect it to average 0.2% this year and rise toward 0.5% in 2026, offering reassurance that further immediate easing isn’t needed.
Analysts said the decision was widely anticipated, noting that the franc has remained relatively stable against the euro. “It was no surprise the SNB left rates unchanged at 0%,” said GianLuigi Mandruzzato, economist at EFG Bank, who argued the pause reflected inflation returning to target while growth remains subdued.
Pressure to Cut May Return
Not all observers believe the easing cycle is over. Capital Economics’ Adrian Prettejohn argued that inflation could average close to zero next year, raising the risk of deflation and forcing the central bank back into action. While the SNB insists it would be reluctant to revisit negative rates, some economists think policymakers will have little choice if trade headwinds persist.
The pause in Switzerland comes just a week after the U.S. Federal Reserve lowered rates again to counter rising unemployment. That divergence highlights how central banks across advanced economies are adjusting policy in different ways as Trump’s trade measures ripple through global markets.
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