The Swiss National Bank cut interest rates by 25 basis points to 0%, fueling concerns about a return to negative rates.

The move was expected as inflation pressures ease, with Switzerland currently facing slight deflation. SNB emphasized a focus on medium-term price stability despite short-term negative inflation.

The bank lowered its inflation forecast for 2025 and highlighted economic uncertainty, mainly from abroad.

Switzerland’s strong franc, driven by its safe-haven status, continues to suppress inflation by making imports cheaper.

To counter this, the SNB aims to keep interest rates lower than elsewhere to limit the franc’s appreciation, CNBC has reported.

Following the rate cut, the franc strengthened against the U.S. dollar.

Written by B.C. Begley