Responding to the U.S. tariff storm! Three European central banks cut interest rates consecutively within 24 hours.

This week, central banks from 18 countries—managing over 40% of the global economy—largely held rates steady. The Federal Reserve, the Bank of Japan, and the Bank of England, along with those of Pakistan, Turkey, and Chile, all maintained their existing policy rates. Against this backdrop of widespread inaction, the synchronized easing by three European central banks stands out even more sharply. On Thursday, the Swiss National Bank (SNB) cut its policy rate by 25 basis points—even though just this past March, SNB officials had signaled that monetary easing might already be coming to an end. Similarly, Sweden’s Riksbank implemented an identical 25-basis-point cut one day earlier. The most surprising move came from Norges Bank—the central bank of Norway. Not a single economist surveyed by Bloomberg had predicted Norway would cut rates by 25 basis points on Thursday, marking the country’s first post-pandemic rate reduction. With the July 9 deadline looming for the potential reimposition of punitive U.S. trade tariffs—compounded by ongoing uncertainty stemming from the Russia-Ukraine conflict and the threat of possible U.S. military action against Iran—global policymakers face increasingly complex cross-border challenges. The preemptive actions taken by these three European central banks may represent the most direct response yet to such mounting uncertainty. Inflation Easing Switzerland’s inflationary pressures have virtually disappeared. Consumer prices fell 0.1% year-on-year in May, and the SNB’s latest forecast projects inflation rising only 0.2% this year. This is largely attributable to safe-haven capital inflows driving the Swiss franc higher: since Donald Trump’s return to office, the CHF has appreciated significantly against both the U.S. dollar and the euro.

ATFX: The Swiss National Bank maintains its zero-interest-rate policy; USD/CHF surges short-term.

Since June 2025, the Swiss National Bank (SNB) has maintained its zero-interest-rate policy. Over this period, the yield on 10-year Swiss government bonds has shown signs of rising, recently reaching 0.577%—above the current benchmark policy rate. This yield increase forms a core market rationale for expectations that the SNB may eventually raise rates. In contrast, the Bank of Japan began raising rates in 2024 and has gradually exited its zero-interest-rate regime. The BOJ felt confident enough to hike because domestic goods demand has rebounded markedly, and Japan’s CPI annual rate has consistently met or exceeded its 2% target for several years running. The same principle applies to Switzerland: only when CPI data rises significantly and sustainably toward the SNB’s target will there be sufficient justification to abandon the zero-rate policy. Subjectively, the SNB does not wish for the Swiss franc to continue appreciating against either the U.S. dollar or the euro, as such appreciation would exacerbate domestic deflation and erode the export competitiveness of Swiss watches, pharmaceuticals, and precision manufacturing. Indeed, the SNB previously resorted to the extreme measure of abandoning its CHF/EUR exchange-rate floor of 1.20 to deliberately weaken the franc. Thus, until Swiss inflation reaches its target level, not only is a rate hike unlikely—but even the implementation of a rare negative interest rate policy remains a distinct possibility. Figure 2: Overlay of Swiss CPI Annual Rate and WTI Crude Oil Price Chart — ATFX Switzerland’s inflation rate, like that of the United States, moves in tandem with global oil prices. However, while rising international oil prices have pushed U.S. inflation up to 3.4%, they have lifted Swiss inflation by only 0.8%. Switzerland’s ability to maintain relatively low inflation despite high oil prices stems from its diversified energy mix: in addition to oil and natural gas—common to most countries—it relies heavily on hydropower and nuclear energy, greatly reducing the Swiss macroeconomy’s sensitivity to fluctuations in global oil prices.

Swiss Inflation Quickens to 2-Year High Driven by Oil and Franc

1 day ago

Switzerland's inflation reached a two-year high in September, driven by higher oil prices and a weaker franc. The Swiss National Bank kept borrowing costs at zero, anticipating the price pressures remain temporary compared to Europe.

bloomberg

2026-09-30

Swiss Inflation Quickens to 2-Year High Driven by Oil and Franc

Swiss Inflation Quickens to 2-Year High Driven by Oil and Franc

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