Back to zero

The Swiss National Bank (SNB) lowered its official policy rate to 0% yesterday. It cut the rate by 25 basis points from its previous level of 0.25%, moving back to zero. Rates were zero in 2022 (like everywhere else) after the Pandemic and reached 2% during 2023. As inflation moved into negative territory in May (-0.1%) and the Swiss Franc strengthened, the SNB was forced to act to try to jumpstart the economy and avoid deflation, in sharp contrast to the U.S., where the Fed still sees upward risks for prices. Norway and Philippines have cut recently as well, limiting rate hikers and holders to Turkey, Brazil, Japan and the US. If indeed globalization meaningfully decreases, which is difficult to see, we might see a more asynchronous behaviors in economies around the world, but it’s also difficult to see inflation going up in one country and down in another, consistently.

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Source: Zerohedge, Bloomberg.