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The Swiss National Bank has reduced interest rates by a quarter point to zero, but did not go as far as the negative interest rates because it is struggling to contain its currency that has plunged on the global trade voltages.
It is the first time that the Alpine Land, which is one of the few globally, experiment with negative interest rates, has an interest rate of zero, as it has taken up re -blame in inflation and an increasing Swiss franc, a haven currency that investors in the trade war of US President Donald Trump.
The cut comes after an annual inflation in Switzerland, the drown minus 0.1 percent in MayThe first negative reading in four years. The Swiss franc – by $ 10 percent compared to the dollar this year – has reduced import costs and reduced consumer prices.
The Swiss franc increased after the expected reduction on Thursday, with the dollar decreasing by 0.2 percent compared to Franc to the afternoon trade at SFR0,817.
According to the levels implied by the SWAPS markets, a minority of dealers had set a larger half-point cut. The rally of the Franconian after the decision on Thursday was arranged by these bets, which were “wrapped”, analysts from BBH said.
The SNB chairman Martin Schlegel said at a press conference that the bank “would not make a decision to go slightly negative”. The central bank would also have to take into account the interests of savers, pension funds and others, he said.
The dealers slightly circumcised their bets on further interest cuts according to Schlegel’s remarks and provided a chance of around 60 percent that SNB will reduce 0.25 percent again by March next year.
The two -year state bond in Switzerland, which are sensitive to movements of interest expectations, rose by 0.09 percentage points to minus 0.10 percent.
The SNB has also repeatedly identified financial stability risks from high -flying ratings for Swiss property in a lower interest rate environment.
However, Schlegel did not move to a negative area, with the global trade people may have forced the bank in the coming months.
“It sounds like they are playing after hearing, which slightly marks the conviction of the market conviction in negative tariffs,” said Francesco Pesole, FX strategy at ING.
The sharp increase in the so -called Swissie this year has complicated political design. The SNB tries to relieve the pressure without triggering currency manipulation from the United States without accusations of currency manipulation Switzerland On an observation list during Trump’s first term. Analysts say that the reduction in installments are a diplomatic secure route than direct FX intervention.
The decision of the SNB is in contrast to the continuation of the Federal Reserve Waiting. Also the Bank of England Hold prices at 4.25 percent at his last meeting.
However, the Norway Central Bank unexpectedly lowered the loan costs on Thursday and solved monetary policy for the first time since Covid 19 pandemic. The strength of the economy in the largest oil and gas producer in Western Europe had caused interest to keep interest rates higher than almost all neighbors, including the Sweden Riksbank and the European Central Bank. But the Norges Bank decided that the intellations were suppressed so far that it could reduce interest rates to 4.25 percent by a quarter.
Switzerland introduced negative interest rates for the first time in December 2014 than the SNB Fix the deposit rate to minus 0.25 percent to contain the appreciation of the Franconian in the middle of tributaries of the safe port.
The SNB in one level increased the rate to minus 0.75 percent, the lowest level in the world. Politics remained for more than seven years and also made it one of the longest negative installment periods in the world until it left it in 2022.
The cut on Thursday creates a potentially difficult situation for Swiss banks. They no longer earn interest in their reserves with the SNB, but theoretically have less justification to pass them on to customers.
Daniel Kalt, chief economist at UBS, the country’s largest bank, said that zero percent are probably the most difficult scenario for banks.
“In terms of pressure on the net interest margins, it could not be worse than in today’s situation. This makes it difficult for banks to justify the fees for customers, as they did in the previous period of negative interest rates,” said Kalt.
