ZURICH (March 20): The Swiss National Bank cut its policy interest rate by 25 basis points on Thursday, leaving borrowing costs just above zero, arguing that inflationary pressures were low despite uncertainty over the impact of US President Donald Trump's trade policies.

The SNB reduced its key rate to 0.25% from 0.5%, its fifth successive cut since it started lowering borrowing costs in March 2024, matching economists' expectations in a Reuters poll.

The Swiss franc weakened slightly against both the euro and the dollar after the decision.

It was last flat at 0.95705 against the euro, having traded around 0.9537 earlier and at 0.8803 to the dollar, leaving the US currency up 0.4% on the day.

"The SNB was not only the first big central bank to have started cutting rates in this cycle, with this step today, it likely is also the first one to have finished cutting rates," said Karsten Junius, chief economist at Bank J Safra Sarasin.

"The upward revisions of inflation profile indicate that no further rate cut is needed."

The decision comes on a busy day for central banks, with the Bank of England and Sweden's central bank also due to announce their policy decisions on Thursday.

The US Federal Reserve on Wednesday held interest rates steady, citing a period of "unusually elevated" uncertainty linked to the initial policies of the Trump administration.

The new 0.25% rate is the SNB's lowest since September 2022, and brings it close to sub-zero interest rates again, a move it has previously not ruled out.

"With today's rate adjustment, the SNB is ensuring that monetary conditions remain appropriate, given the low inflationary pressure and the heightened downside risks to inflation," the SNB said.

The cut aims at preventing a further decline in Swiss inflation, which eased to 0.3% in February, its lowest level in nearly four years, and keeping it within the 0-2% target range which the central bank defines as price stability.

The SNB said that its baseline scenario anticipated that global growth will be moderate over the coming quarters and that underlying inflationary pressure should continue to ease gradually over the next quarters, particularly in Europe.

It noted, however, that this scenario for the global economy is currently subject to high uncertainty.

"The situation could change rapidly and markedly, particularly from a trade and geopolitical perspective. For example, increasing trade barriers could lead to weaker global economic development," it said.

"At the same time, a more expansionary fiscal policy in Europe could provide stimulus to the economy in the medium term."

Uploaded by Magessan Varatharaja