05.05.2025 17:32
In Switzerland, annual inflation slowed more than expected in April, dropping to 0%, which supported further interest rate cuts in June.
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Annual inflation in Switzerland slowed more than economists had predicted in April, dropping to 0%.
INFLATION IN SWITZERLAND REACHED 0%
The Swiss Federal Statistical Office (FSO) released preliminary data on inflation for April. Accordingly, the Consumer Price Index (CPI) in Switzerland fell from 0.3% in March to 0% in April on an annual basis. The expectation was that inflation would decrease to 0.2% in April. Thus, inflation reached its lowest level in the last four years, remaining at the lower end of the Swiss National Bank's (SNB) target range of 0 to 2% for price stability.
The CPI in the country also showed no change on a monthly basis. The decline in hotel and holiday accommodation prices balanced out the prices of clothing and vegetables. Core inflation, which excludes volatile prices such as food and energy in Switzerland, was 0.6% in April.
EXPECTATIONS FOR INTEREST RATE CUT INCREASED
Given the stronger-than-expected decline in inflation in April, economists expect another interest rate cut from the Swiss National Bank (SNB) in June. Economists also noted that the likelihood of negative inflation in May has increased due to low energy prices and the pressure of the Swiss franc on inflation.
INTEREST RATE CUT OF 25 BASIS POINTS IN MARCH
On March 20, the SNB had lowered the policy interest rate by 25 basis points as expected to support the economy. With this reduction, the Bank became the first central bank among developed countries to cut interest rates in response to inflationary pressures following COVID-19, marking the fifth consecutive cut since March 2024. SNB President Martin Schlegel has repeatedly emphasized that the bank would lower the policy interest rate back into negative territory if necessary to maintain price stability.
The bank is expected to lower the policy interest rate to 0% at its meeting on June 19. Switzerland is among the countries with the lowest annual inflation rates among major economies, standing at 0% in April. The SNB aims for inflation to remain between 0 and 2%.
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