You Won’t Believe Why Switzerland Just Hit the Big Red “Zero” on Interest Rates (Again!)

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June 19, 2025. A date that returns us, unwillingly, to the cold embrace of Zero. The Swiss National Bank (SNB), with the mechanical precision of an Alpine train schedule—and perhaps no greater cheer—pulled its interest rate lever down to zero percent. Effective immediately; effective permanently (so it sometimes feels!).

Switzerland Rediscovers Zero: The Eternal Recurrence 📉

The SNB, after six consecutive, almost ritualistic reductions—each one announced with the solemnity of a church bell—has at last arrived at zero. Yes, zero: not a number, but a destiny. The policy rate slips by another 0.25 percentage points, June 20, 2025. Back to where so many central bankers promised we’d never return (we all know how promises in economics age).

Deflation presses on, as relentless as a Siberian winter. The central planners in Zurich now cite the mercilessly strong franc and consumer prices sinking 0.1% in May—the cost of tourism falling, oil prices dropping… The franc, smug as ever, up more than 10% against the U.S. dollar (it probably sips espresso, smiling at Wall Street’s woes). A safe haven, they say—though one with rent that would make Dostoevsky blush.

Swiss exporters and policymakers now huddle together in the face of “imported cheapness,” praying for a little fashionable inflation to put some rosiness into their forecasts. The gods of monetary policy, however, offer only meager gifts: perhaps 0.2% inflation in 2025, 0.5% in 2026, and—dare we dream?—0.7% in 2027. Progress as glacial as, well, a Swiss glacier. 🧊

Savers stare into the abyss of negligible returns, while banks gnash their teeth over shrinking lending margins. Domestic borrowers may rejoice by taking out new loans, buying homes, and filling their garages with even more watches. Analysts murmur darkly about rates dropping lower still—into negative territory, where investors pay banks for the privilege of keeping their money. “It’s just a phase,” assures the central bank. Just a phase, like lederhosen at Oktoberfest.

Worldwide, the SNB’s maneuver may hint at a coming ZIRP relapse in “advanced economies” (a phrase that feels increasingly sarcastic). Investors, starved for yield, will now chase riskier pastures—equities, cryptocurrencies, perhaps tulip bulbs if history repeats itself loudly enough. The crypto bazaar always welcomes a new herd of yield-hunters.

Meanwhile, the SNB will keep “monitoring economic conditions” (translated: “not sleeping well at night”) and intervene in foreign exchange markets whenever the franc gets too conceited. As for Swiss GDP growth, forecasts remain as modest as a monastery lunch: perhaps 1%, perhaps 1.5% for the next two years.

Zero percent: for savers, for dreamers, for anyone who likes the thrill of running in economic circles and calling it progress. Switzerland, against the shrieking winds of the global market, finds poetry—and perhaps a little dark humor—in the number zero. 🇨🇭🕳️

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2025-06-19 18:59