Swiss National Bank Holds Firm Amid Improved Economic Outlook

The Swiss National Bank has decided to maintain its policy interest rate at 0%, citing improved economic outlook due to reduced U.S. tariffs and controlled inflation. Despite the positive outlook, analysts warn that Switzerland may need to consider negative rates if inflation stays subdued.

The Swiss National Bank (SNB) maintained its policy interest rate at 0% for the second consecutive meeting on Thursday, leveraging a newly reached agreement with the U.S. to reduce tariffs on Swiss goods as a key boost to its economic forecast.

Despite the decision, the central bank slightly reduced its inflation expectations, with some analysts speculating that an eventual dip into negative interest rates could be necessary if inflation remains low. Switzerland's economy contracted by 0.5% in the third quarter, while inflation dropped to 0% in November, the lower limit of SNB's target range.

SNB Chairman Martin Schlegel noted the significance of medium-term indicators in the bank's inflation outlook. The Swiss franc remained steady against major currencies post-announcement, while recent tariff reductions and potential increases in foreign fiscal spending have been flagged as positive influences on Switzerland's economic landscape.

(With inputs from agencies.)