The Swiss National Bank cuts interest rates to 0. The deep logic behind the short-term shock of the Swiss franc
2025-06-19 15:57:05
On June 19, 2025, the Swiss National Bank cut interest rates by 25 basis points to 0% as expected by the market. This is the sixth rate cut since March 2024, and the monetary policy has further entered the easing range. Although the market generally predicts that this rate cut is reasonable, the accompanying downward adjustment of inflation expectations and the cautious attitude towards the global economy still pose a significant impact on the foreign exchange market. The USD/CHF exchange rate fluctuated violently after the announcement of the news, falling sharply to 0.8179 in the short term and then rebounding rapidly. It is currently trading around 0.819.
Before this decision, the market had fully factored in the possibility of a 25 basis point rate cut, especially against the backdrop of Switzerland's annual inflation rate falling to -0.1% in May and weaker tourism and oil prices, marginal easing of monetary policy became the consensus expectation of the market. The continuous decline in inflation expectations, the increasing pressure on the appreciation of the Swiss franc, and the divergence of policy paths between Europe and the United States have jointly pushed the Swiss National Bank to maintain an easing pace, while the United States and Europe have recently maintained stability and slowly lowered interest rates, respectively, exacerbating the relative adjustment of monetary policy stances.
Judging from the specific expected data, the inflation forecast for 2025 was lowered to 0.2% (previously 0.4%), 0.5% for 2026 (previously 0.8%), and 0.7% for 2027 (previously 0.8%), showing an overall downward trend, further confirming the weakening of internal price pressure.
In terms of economic growth, GDP growth is expected to remain at 1%-1.5% in 2025 and 2026, and attention to external risks continues to heat up. The central bank has repeatedly mentioned that "the global economy is highly uncertain" and "trade frictions may intensify again", and specifically pointed out that "fiscal policy may support unexpected growth", demonstrating its vigilance against external uncertainties.
Judging from the K-line chart, an obvious long negative line was formed after the news was announced, reaching a minimum of 0.8179, breaking through the lower track of the Bollinger Band (0.8187), and the decline was rapid; but then it rebounded quickly with technical covering, and is currently returning to oscillate near the middle track (0.8202).
The Swiss National Bank's rate cut coincided with the day after the Federal Reserve kept interest rates unchanged and hinted at a rate cut this year, and the European Central Bank had already cut interest rates by 25 basis points earlier this month. In an environment where the monetary policy shifts of major economies are not synchronized, Switzerland's policy stance appears to be more radical. Analysts believe that its purpose is to suppress the appreciation of the Swiss franc and avoid a structural blow to exports and tourism. In contrast, the United States has not yet shown signs of a systemic inflation retreat, and the US dollar still has an interest rate advantage, which constitutes a medium-term upward pressure on the Swiss franc.
From the market perspective, institutions generally expect that the current round of easing by the Swiss National Bank is coming to an end and may enter an observation period in the future, especially if global fiscal policies launch a new round of stimulus, which will form new variables on the inflation path. Traders tend to continue to correct the weakening structure of the Swiss franc in the short term, but pay more attention to the relative changes in European and American interest rate policies in the medium term. The options market shows that the volatility of the USD/CHF has increased, and the market has increased its differences on extreme paths.
Policy Background and Market Expectations
Before this decision, the market had fully factored in the possibility of a 25 basis point rate cut, especially against the backdrop of Switzerland's annual inflation rate falling to -0.1% in May and weaker tourism and oil prices, marginal easing of monetary policy became the consensus expectation of the market. The continuous decline in inflation expectations, the increasing pressure on the appreciation of the Swiss franc, and the divergence of policy paths between Europe and the United States have jointly pushed the Swiss National Bank to maintain an easing pace, while the United States and Europe have recently maintained stability and slowly lowered interest rates, respectively, exacerbating the relative adjustment of monetary policy stances.
Data interpretation and policy logic
Judging from the specific expected data, the inflation forecast for 2025 was lowered to 0.2% (previously 0.4%), 0.5% for 2026 (previously 0.8%), and 0.7% for 2027 (previously 0.8%), showing an overall downward trend, further confirming the weakening of internal price pressure.
In terms of economic growth, GDP growth is expected to remain at 1%-1.5% in 2025 and 2026, and attention to external risks continues to heat up. The central bank has repeatedly mentioned that "the global economy is highly uncertain" and "trade frictions may intensify again", and specifically pointed out that "fiscal policy may support unexpected growth", demonstrating its vigilance against external uncertainties.
Market short-term reaction: USD/CHF plunges, technical pressure released
Judging from the K-line chart, an obvious long negative line was formed after the news was announced, reaching a minimum of 0.8179, breaking through the lower track of the Bollinger Band (0.8187), and the decline was rapid; but then it rebounded quickly with technical covering, and is currently returning to oscillate near the middle track (0.8202).
Global interest rate cycle divergence begins to emerge
The Swiss National Bank's rate cut coincided with the day after the Federal Reserve kept interest rates unchanged and hinted at a rate cut this year, and the European Central Bank had already cut interest rates by 25 basis points earlier this month. In an environment where the monetary policy shifts of major economies are not synchronized, Switzerland's policy stance appears to be more radical. Analysts believe that its purpose is to suppress the appreciation of the Swiss franc and avoid a structural blow to exports and tourism. In contrast, the United States has not yet shown signs of a systemic inflation retreat, and the US dollar still has an interest rate advantage, which constitutes a medium-term upward pressure on the Swiss franc.
Institutional views and trader sentiment diverge
From the market perspective, institutions generally expect that the current round of easing by the Swiss National Bank is coming to an end and may enter an observation period in the future, especially if global fiscal policies launch a new round of stimulus, which will form new variables on the inflation path. Traders tend to continue to correct the weakening structure of the Swiss franc in the short term, but pay more attention to the relative changes in European and American interest rate policies in the medium term. The options market shows that the volatility of the USD/CHF has increased, and the market has increased its differences on extreme paths.
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