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Swiss National Bank (SNB) President Martin Schlegel has warned that the country will be hit harder than most by the escalating trade war between the US and the rest of the world. In a speech on Friday at the Swiss National Bank’s annual shareholder meeting in the Swiss capital, Schlegel stated that the situation is uncertain for all countries involved. However, he noted that as a small and open economy, Switzerland is especially hit hard by the effects of protectionism. He added that the environment poses a significant challenge for monetary policy. He explicitly cited new trade actions and tariffs recently implemented by the US administration that have roiled markets worldwide. Those tensions, he said, are forcing countries to rethink trade routes and economic alliances. The Swiss government has already withdrawn its annual economic forecast, saying there was too much uncertainty because of these tensions. Schlegel also noted that the lasting implications of global fragmentation — the degree to which countries would follow their own national interests and retreat from cooperative global systems — are hazy. SNB cuts interest rate as inflation falls Last week, the Swiss National Bank lowered its main interest rate by 0.25% to combat the business risks. This decision was made to support price stability and growth. Several economists now believe the central bank will go even bigger. Some predict the SNB could lower its policy rate to zero at its June policy review should the economic picture darken. The strong franc is one of the biggest concerns for the SNB. With investors rushing toward safe assets amid global anxiety, the franc has been getting stronger — and that is a problem. A stronger franc makes Swiss exports more expensive, can damage businesses, and cause lower inflation or even deflation. Schlegel also gave public reassurance that…

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Filed under: News - @ April 25, 2025 5:22 pm