Swiss National Bank decreases rates in March

Latest bank decision: At its meeting on 20 March, the Swiss National Bank (SNB) lowered the policy rate by 0.25 percentage points to 0.25%.

Monetary policy drivers: The key domestic factors influencing the SNB's decision were moderate economic activity, weak headline and core inflation—both have tracked below 1.0% in recent months—as well as the Bank’s forecast for inflation to remain below 1.0% going forward.

Policy outlook: The SNB stated its willingness to adjust its monetary policy as necessary to ensure inflation remains in line with the target of being positive but below 2.0%. Some panelists see rates on hold for the remainder of the year, others see a final 25 basis-point cut, and one panelist sees a return to the negative rates observed in the pre–COVID era.

Panelist insight: On the outlook, Goldman Sachs analysts said: “We see [the] decision and communication as balanced and continue to expect the SNB to deliver one more 25bp cut in June to a terminal rate of 0%, as we see a potentially sizeable hit to activity in the pipeline from US tariffs.” ING’s Charlotte de Montpellier said: “If the inflation outlook remains at 0.8% for the next few years, the SNB is unlikely to cut rates to 0%, avoiding proximity to negative territory. However, if the global environment deteriorates and inflation forecasts are revised downward, the SNB may be compelled to cut rates to 0%. While this is a close call, we believe a prolonged pause is the most probable outcome at this stage.”

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