Policy rate at zero percent – SNB responds to low inflation and a weak economy

In its monetary policy assessment on 19 June 2025, the Swiss National Bank (SNB) decided to cut the policy rate from 0.25 to 0.0 percent. In the view of Philipp Merkt, Chief Investment Officer (CIO) at PostFinance, it became apparent that this would be the sixth policy rate cut in a row:

After a continuous decline over recent months, the Swiss inflation rate even slipped slightly into negative territory in May, falling below the SNB’s target range. This low figure is largely due to the prices of imported goods, which are well below the previous year’s level, partly owing to the strong Swiss franc. At the same time, however, domestic inflation has also weakened significantly. The ongoing uncertain economic environment, particularly with regard to the USA, does not suggest a weakening of the franc or an economic upturn. But both would be factors that could raise inflation again slightly. Philipp Merkt is certain:

The latest policy rate cut will be good for homeowners with short-term financing in particular as it reduces the cost of Saron mortgages. For long-term mortgages, however, any room for manoeuvre on the downside already appears to be exhausted. Moreover, private households will have to adapt to further declines in interest rates on savings.