Swiss Central Bank Ready to Cut Rates Below Zero

The Swiss National Bank (SNB) is prepared to cut interest rates below zero if necessary to maintain inflation between 0% and 2%, according to SNB policymaker Petra Tschudin. Speaking in an interview, Tschudin stated that the bank would take this step if needed to keep consumer prices within its target range.

The SNB has kept its interest rate at zero since last year, despite facing low inflation of 0.4% in July. This is a significant drop from global energy price increases caused by the Iran war. Economist forecasts suggest that there will be no change in the benchmark through 2027 unless new shocks emerge.

Tschudin, who serves alongside President Martin Schlegel and Vice President Antoine Martin on the board, emphasized that below-zero rates function differently than positive ones but do not restrict them. She noted that the SNB does not issue forward guidance due to its small, open economy's vulnerability to international developments.