Swiss National Bank set to cut rates by 25bp

The Swiss National Bank (SNB) is expected to cut its benchmark interest rate by 25 basis points to 0.25% in its meeting on March 20, 2025. Many economists believe the SNB will continue to reduce rates, keeping them at this low level at least until 2026. This follows a surprising cut of 50 basis points in December. Inflation in Switzerland has remained low, at just 0.3% in February. This is within the SNB's target range of 0-2% and is the lowest it has been in nearly four years. The central bank seems to have room to ease further, but there are worries about the strong Swiss franc. Its high value has made it tough for exporters, especially in the watchmaking industry. Some analysts are more cautious. UBS economists say the decision is uncertain due to steady Swiss economic growth and global trade worries. Possible new tariffs under another Trump presidency could create challenges for Swiss exporters, particularly in pharmaceuticals. Also, the strengthening euro, aided by expected spending in Germany, adds complexity to the situation. Investors are looking for signs of future actions from the SNB. While a 25-basis-point cut seems likely, the SNB is known for surprises. Market watchers will closely examine the SNB's statements for hints about its future plans.