Swiss National Bank Prioritizes Price Stability Over Short-Term Inflation Data

SNB Signals Steady Policy Approach

On Tuesday, May 27, 2025, Swiss National Bank (SNB) Governor Martin Schlegel emphasized a focus on long-term price stability rather than reacting to short-term inflation fluctuations. Speaking on the potential for negative inflation in the coming months, Schlegel noted that such readings would not automatically trigger a policy response from the SNB. He clarified that the bank’s strategy centers on achieving medium-term price stability, rather than being swayed by monthly data.

Inflation Hits Four-Year Low

Switzerland’s inflation rate fell to 0.0% in April 2025, marking the lowest level in four years and aligning with the SNB’s target range for price stability. This significant drop has fueled speculation about a possible interest rate cut at the SNB’s upcoming meeting on June 29, 2025. Market expectations currently indicate a 25% probability of a 25-basis-point rate reduction, bringing the main rate to zero, and an equal chance of a 50-basis-point cut to -0.25%.

Policy Outlook Amid Economic Signals

Schlegel’s remarks underscore the SNB’s cautious stance, prioritizing consistent price stability over immediate adjustments based on transient inflation figures. As the bank prepares for its next policy decision, investors are closely monitoring its approach to balancing low inflation with economic stability, particularly in light of global trade developments and domestic price trends.