Core Viewpoint - A survey of economists indicates that 80% expect the Swiss National Bank (SNB) to cut interest rates by 25 basis points in the upcoming policy meeting, returning the benchmark rate to zero, the same level as in September 2022 when the SNB ended a seven-year negative interest rate policy [1][3] Group 1: Interest Rate Expectations - Among 22 forecasters, only three predict a 50 basis point cut to -0.25%, while six others expect a reduction to -0.25% in September [1] - Most forecasters believe the SNB's easing cycle will conclude in June [1] Group 2: Inflation and Economic Conditions - The SNB may cite extremely weak consumer price growth as justification for a sixth consecutive rate cut, with the Swiss inflation rate falling to negative territory in May for the first time since 2021 [3] - Forecasts suggest an average inflation rate of only 0.3% in 2025 and 0.6% in 2026 [3] Group 3: Currency and Economic Impact - Following President Trump's announcement of significant tariffs in April, there has been a surge in safe-haven flows into the Swiss franc, which has appreciated over 8% against the US dollar [6] - The SNB is attempting to prevent further appreciation of the Swiss franc, as a stronger currency could lower domestic inflation and harm exports, negatively impacting economic growth [6][8] - SNB President Martin Schlegel indicated readiness to intervene in the foreign exchange market if necessary to maintain price stability, and he acknowledged the potential return to negative interest rates despite the challenges it poses to the financial system [6][8] Group 4: International Relations and Currency Manipulation Concerns - The strong Swiss franc has created a dilemma for the SNB, forcing policymakers to choose between negative interest rates and foreign exchange market intervention, which could provoke discontent from the US [8] - The US Treasury has placed Switzerland on its watchlist for currency policy, indicating ongoing scrutiny of the SNB's actions [8]