Swiss Inflation Hits 0%: Next Swiss National Bank Rate Cut Looms

Swiss inflation unexpectedly dropped to 0% in April, prompting speculation of a rate cut by the Swiss National Bank. The current 0.25% policy rate may be reduced at the bank's upcoming meeting to prevent inflation from falling below the target range of 0-2%.

Swiss inflation fell to a surprising 0% in April, according to government statistics released on Monday. This development boosts the possibility of an interest rate cut by the Swiss National Bank in the coming month.

In a marked change, consumer prices saw no increase on a yearly basis last month. This was below the 0.3% increases observed in February and March and marked the lowest end of the SNB's target range of 0-2%. The results fell short of a Reuters poll predicting a 0.2% rise.

The new data strengthens the likelihood that the Swiss National Bank will reduce its current policy rate of 0.25% during its meeting on June 19 to counteract the risk of inflation dropping below their preferred range. Market anticipations prior to the data indicated a 93% chance of a cut to 0% and a 95% likelihood of rates dipping below 0% within the year.

(With inputs from agencies.)