ZURICH: Switzerland’s central bank has maintained its policy rate at zero percent while warning that substantial United States tariffs are negatively affecting the country’s export-reliant economy.
The Swiss National Bank kept its economic growth projection for this year unchanged at between one and 1.5%.
It revised its 2026 growth forecast down to “just under” one percent due to tariff impacts and ongoing economic uncertainty.
Central bank chief Martin Schlegel told reporters that “the US tariffs present a major challenge for affected companies and are likely to dampen economic activity”.
The SNB stated that exports and investment would likely suffer, particularly for companies in the machinery and watchmaking sectors.
United States President Donald Trump surprised Switzerland last month by announcing 39 percent duties on imports from the country.
These tariffs rank among the highest in his global tariff initiative.
Most analysts had anticipated the SNB would maintain the 0% rate despite recent speculation about a potential return to negative rates.
Negative interest rates formed the foundation of SNB monetary policy from early 2015 until mid-2022.
This policy aimed to control the Swiss franc’s appreciation and maintain export competitiveness during turbulent periods.
Schlegel declined to provide forward guidance when questioned about a possible return to negative rates.
He explained that “we came to the conclusion that it’s the right decision to leave interest rates at 0%”.
The central bank chief acknowledged that “uncertainty about inflation and economic developments is still elevated”.
He added that the SNB would “continue to monitor the situation and adjust our monetary policy if necessary”.
Schlegel emphasised that “we are ready to use all tools at our disposal”.
He clarified that “the bar to go into negative territory is higher than for a normal rate cut”.
The full economic impact of the US tariffs on Switzerland remains unclear.
The Swiss government is attempting to negotiate lower tariff rates with Washington.
Trump has additionally threatened to impose steep tariffs on pharmaceutical products worldwide.
Such measures would significantly harm Switzerland since pharmaceuticals represent its largest export sector.
Capital Economics analyst Adrian Prettejohn predicted in a market note that the SNB would return to negative rates “over the coming quarters”. – AFP
