SNB will soon cut the guide rate, will it go negative again in 2025?
Keystone-SDA
The Swiss National Bank (SNB) will likely lower the key interest rate on Thursday, acording to experts. The extent of the intervention may vary and in the longer term some do not rule out a return to negative interest rates.
All eyes are on Zurich, where institution’s new chairman Martin Schlegel- he has been in office since early October- will make his first rate decision known on Thursday.
On September 26, the SNB had lowered the guide rate by 0.25 points to 1%, making the third cut this year (all three by 25 basis points). In a communication not usual for the Swiss monetary authority, the bank had also warned about the possibility of further cuts.
Most analysts – 14 out of 17 – surveyed by the AWP press agency believe the SNB will make a quarter-point cut tomorrow, bringing the rate to 0.75%. The remaining three observers bet instead on a stronger intervention, at 0.50%.
Economists also agree that regardless of the size of the next drop, more downward interventions will follow in 2025. Negative interest rates in the medium term cannot be ruled out either. For such a scenario to come true, however, the Swiss economy would have to enter recession, the franc would have to appreciate significantly, and inflation would have to fall into negative territory: for many experts, none of this is on the horizon, at least at the moment.
Adapted from Italian by DeepL/ac
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