Swiss National Bank Cuts Key Interest Rate to 0% Amid U.S. Scrutiny

On June 21, 2025, Swiss National Bank (SNB) Chairman Martin Schlegel reaffirmed the bank's dedication to maintaining price stability through its foreign exchange market policy. This statement followed the SNB's press conference on June 19, where it lowered the key interest rate to 0%. The SNB's actions are significant as Switzerland has recently been included in the U.S. Treasury's currency manipulation watchlist.

Schlegel clarified that the SNB's interventions in the foreign exchange market are exclusively aimed at stabilizing inflation, which the bank targets to be between 0% and 2%. The recent interest rate cut to zero was a response to weakening domestic demand. Despite the U.S. Treasury's scrutiny, Schlegel emphasized that past interventions were not intended to benefit Swiss exporters but were strictly to preserve price stability. He also highlighted the transparency of the SNB's foreign exchange market policy, which is well understood by global partners.

The U.S. Treasury's decision to add Switzerland to its watchlist for potential currency manipulation adds pressure, as Washington has threatened 31% tariffs if no resolution is found. Schlegel, however, maintained that the SNB has nothing to hide and that past dialogues with the U.S. have been constructive. He indicated that if Switzerland appears on the list again, the focus would be on opening more dialogue rather than conflict.

Schlegel also expressed support for the Swiss government's proposed capital rules for UBS, which would require the bank to hold an additional $26 billion in core capital. This move is part of Switzerland's broader effort to ensure financial stability amid rising global risks. The SNB's approach remains flexible, with interest rate policy as the primary tool. However, the bank is prepared to intervene in the foreign exchange market if necessary to achieve its inflation targets.

Looking ahead, the SNB will continue to monitor inflation data closely. If inflation rises or geopolitical tensions escalate, the bank may take further action in the markets. However, the SNB's foreign exchange market policy will only be employed when necessary, with the primary focus remaining on stable prices and economic health. As the U.S. reviews Switzerland's position, further talks are anticipated. For now, the SNB is maintaining its course with clarity, calm, and control, ensuring that its actions are directed towards domestic goals rather than distorting global trade.