In the battle with the Swiss franc speculators, the Swiss Central Bank is gradually approaching negative interest rates

On December 11, Jing10 News reported that it is widely expected that the Swiss Central Bank will cut the Benchmark Interest Rate by 25 basis points to 0.75%, which would bring the bank just 3 steps away from zero Interest Rate. They take action every three months and are likely to achieve this goal by 2025 unless they slow down their easing pace. A few analysts also predict that the Central Bank will cut interest rates by a substantial 50 basis points on Thursday. In any case, further rate cuts will deplete the precious ammunition of the Swiss Central Bank. Switzerland already has one of the world’s lowest Interest Rates, which indicates that Swiss policymakers are caught in a dilemma as they try to prevent excessively low inflation. Switzerland’s current inflation rate is 0.7%, close to the lower limit of the target range. If pressure on the Swiss franc cannot be relieved, officials may face difficult tactical choices. They may need to consider expanding their balance sheet through Exchange Rate interventions, which could anger the Trump administration. Nadia Gharbi, an economist at Pictet Bank in Geneva, said that the European economy is weak and a trade war may break out. The possibility of negative Interest Rates cannot be ruled out.