Switzerland returns to the era of zero interest rates

On Thursday, the National Bank of Swiss reduced interest rates by other basis to 0 % – which increases concerns about a possible return to negative prices.

It was widely expected to reduce through the markets before the decision, after traders provided an opportunity of about 81 % of a quarter-point reduction by 19 % of the 50-Basis reduction.

While other countries continue in the battle of inflation, Switzerland faces shrinkage, with Consumer prices Decreased by 0.1 % annual in May.

Low inflation levels are not unusual for Switzerland – the country witnessed several periods of contraction in 2010 and 2020s. The power of the country, the Swiss franc, is a major contributor in this direction.

“As a safe currency, the Swiss franc tends to estimate when there is pressure on global markets,” said Charlotte de Moneller, a great economist who covers France and Switzerland in Inge.

“This drives a decrease in the price of imported products. Switzerland is a small and open economy, and imports acquire a large percentage of inflation in the consumer price index.”

Amid high levels of global economic uncertainty, the franc continuously enhances in recent months, and is expected to be widely continuing in this path, indicating continuous challenges of SNB.

Since the franc power was the main engine of low Switzerland, SNB is now taking steps to restrict the currency rally by maintaining rates “systematically lower than anywhere.”