SNB delivered a widely expected 25bps rate cut, bringing the policy rate down to 0.25%. In its statement, SNB justified the decision by pointing to low inflationary pressures and “heightened downside risks to inflation”.
The central bank acknowledged that Switzerland’s economic outlook has become “considerably more uncertain”, particularly due to rising global trade tensions and geopolitical risks. The external environment remains a key threat to growth.
The new conditional inflation forecast suggests that inflation will remain well within its price stability range, averaging 0.4% in 2025, and 0.8% in both 2026 and 2027. These projections assume that the policy rate stays at 0.25% throughout the forecast horizon.
On the growth front, SNB expects GDP to expand between 1% and 1.5% in 2025, with domestic demand benefiting from rising real wages and easier monetary conditions. However, weak external demand is expected to act as a drag on growth. For 2026, SNB anticipates GDP growth of around 1.5%.
ECB’s Lagarde warns US-EU tariff war could slash eurozone growth by 0.5%
Speaking to a European Parliament committe, ECB President Christine Lagarde warned that US tariffs of 25% on European imports could have a significant negative impact on the Eurozone economy, cutting growth by around 0.3% in the first year.
If the EU responds with retaliatory tariffs, the impact could deepen, reducing Eurozone GDP growth by as much as 0.5%.
While the sharpest impact would be felt in the first year, Lagarde emphasized that the effects would be long-lasting, leaving a “persistent negative effect on the level of output”.
Beyond growth concerns, inflation outlook would also become highly uncertain in such a scenario.
In the short term, EU retaliatory measures and a weaker Euro—stemming from lower US demand for European products—could push inflation higher by around 0.5%.
In the medium term, weaker economic activity would dampen price pressures, ultimately counteracting the initial inflationary impact.
Full opening remarks of ECB’s Lagarde here.