The Swiss central bank, SNB, has lowered its interest rate by 0.25 percentage points to zero percent on Thursday. The SNB announced this in a press release.
This makes Switzerland the first country in Europe to once again have an interest rate of zero percent. Unlike many other central banks, the Swiss are struggling with the fact that inflation in the country is too low.
In connection with the interest rate cut, the central bank points out that inflationary pressures have subsided compared to the previous quarter. In February, inflation was up 0.3 percent, while it was minus 0.1 percent in May, the SNB writes. The decline was mainly due to the price development of tourist and oil products.
By lowering the interest rate, the SNB wants to counter the lower inflationary pressure.
Strong currency helps
According to senior economist at Sydbank Kim Blindbæk, inflation in Switzerland is being pulled down by imported goods because the Swiss franc is strong.
- The Swiss franc functions as a safe haven in the financial markets, and investors therefore seek Switzerland when the waves are high in the markets, he writes in a comment.
The recent unrest and uncertainty in connection with Trump's tariff threats and the situation in the Middle East have therefore caused investors to buy up the Swiss franc, explains Kim Blindbæk.
When the Swiss franc strengthens against other currencies, imported goods become cheaper to buy for citizens of Switzerland. Kim Blindbæk also points out that Switzerland has a long history of low inflation. In 2022, when Europe was characterized by high inflation, inflation in Switzerland peaked at 3.5 percent.
In Denmark, inflation peaked at 10.1 percent in October 2022.
/ritzau/
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