Swiss Rate Cut to 0%—What It Means for Savers and Borrowers

On June 19, 2025, the Swiss National Bank (SNB) cut its benchmark interest rate to 0%, the sixth consecutive cut. This move responds to deflationary pressures and a strong franc. It’s highly relevant for anyone holding deposits, taking out loans, or planning a mortgage.

Understanding the Rate Cut

The SNB pushed the key interest rate down from 0.25% to 0%, with hints at possibly going negative in the future. This means commercial banks earn virtually nothing from parking reserves at the central bank—and may even be penalized through stealth negative rates.

Impact on Customers and Businesses

For savers, deposit interest rates remain minimal—many checking and savings accounts still offer near-zero returns. Borrowers, however, may benefit from slightly cheaper consumer loans, though uneven pass-through of rate cuts means retail customers might see only limited relief.

How Banks Are Affected

Swiss banks face shrinking net interest margins due to the zero-rate environment—expected to reduce net interest income by around CHF 660 million this year. With lower income from traditional deposit-to-loan spreads, banks may rely more on fees and digital banking services to generate revenue.

Economic Outlook & Future Trends

The move helps guard against deflation and supports household and business credit, potentially stimulating the economy. Still, if inflation remains flat, the SNB may brace for negative rates. Banks must adapt through innovation and cost efficiency to maintain lending and stability.

Closing Insights

• Deposit holders might earn nearly nothing on checking accounts.

• Borrowers, especially for mortgages and loans, should compare offers—some may now be slightly more affordable.

• Banks are under pressure to innovate (e.g., via digital banking) and cut costs.

• Policymakers must balance low rates with financial stability.

• Watch for future signs of negative interest rates or credit tightening.

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