Swiss National Bank breaks rate-cut streak amid US trade tariffs

Switzerland’s top bank kept interest rate at zero Thursday, breaking a string of rate cuts that started last year, after Trump’s trade penalties began hurting Swiss companies and dimming hopes for stronger economic growth.

The Swiss National Bank left its key rate at 0%, the lowest among big economies, matching what traders and polls expected. Officials said a small bump in prices over recent months helped them decide against another cut.

It was the bank’s first time keeping rates the same in seven meetings. They had been lowering costs for businesses since March 2024.

Swiss exports got hit hard with US tariffs

This decision came after Trump hit Swiss exports with a 39% tariff in August, creating problems for companies selling goods to America. As a result, Switzerland had suspended all US shipments, as reported earlier by Cryptopolitan.

The bank said machinery makers and watchmakers are getting hit hardest by the trade penalties, but other businesses, especially service companies, haven’t seen much damage yet.

“The economic outlook for Switzerland has deteriorated due to significantly higher U.S. tariffs. The tariffs are likely to dampen exports and investment especially,” bank officials wrote.

Martin Schlegel, who runs the Swiss National Bank, talked to reporters after the rate announcement. He called Trump’s tariffs a big problem for affected companies and said they would probably slow down business activity.

The tariffs and uncertainty have forced the bank to cut its growth forecast for 2026 to just under 1%. They used to think the economy would grow between 1% and 1.5% next year. Officials also warned that more people will probably lose their jobs.

Schlegel told CNBC that exporters face tough times, but the overall economy won’t get hurt too badly.

“The exporters that are directly affected, for them this is very challenging, very difficult, but if you look at the economy as a whole, the impact is limited,” he said on the news channel. “We don’t see a recession in the coming quarter so for 2025, we have growth of 1 to 1.5%, in 2026 we still see growth of roughly 1% so we don’t see a recession.”

Petra Schudin sits on the bank’s main board. She told reporters that Switzerland’s economic future looks worse because of the much higher American tariffs, which will hurt exports and business spending.

In the mean time, Swiss leaders are trying to work out a tariff deal with Trump. The Swiss bank made its choice one week after America’s Federal Reserve cut rates to stop unemployment from rising. Fed officials hinted they might cut more times soon.

Analysts weren’t shocked by the Swiss decision

Analysts pointed out that Switzerland’s currency has stayed pretty steady against the euro as another reason not to make changes.

GianLuigi Mandruzzato works as an economist at EFG Bank. He said keeping rates at 0% made sense.

“It was no surprise the SNB left rates unchanged at 0%,” Mandruzzato said. The choice shows that inflation is back in the bank’s 0-2% target zone and should move toward the middle of that range in coming years while the economy keeps growing slowly.

Bank chief Schlegel has said many times that bringing back negative rates would be really hard. The bank used negative rates from December 2014 to September 2022, which upset savers and pension funds.

Swiss prices have gotten back into the central bank’s 0-2% target range after going negative in May. On Thursday, the bank stuck with its view that inflation will climb to 0.5% in 2026 after hitting 0.2% this year.

Even though rates stayed the same, some experts think the Swiss bank will have to cut them again later.

Adrian Prettejohn, who studies Europe’s economy for Capital Economics, doesn’t think rate cuts are done yet.

“We do not think that this is the end of the rate cutting cycle,” Prettejohn said. He thinks inflation will average around zero next year, which could push the bank to cut rates again to avoid deflation.