Swiss National Bank Head Sounds Alarm: US Trade War Threatens Helvetian Safe Haven

Switzerland’s monetary guardian drops the neutrality act—tensions with Washington could hit harder than a fondue pot dropped on cobblestones.

The SNB chief’s warning cuts through Alpine calm: export-reliant Switzerland faces asymmetric risks if trade spats escalate. Small economy, big exposure—classic David vs. Goliath scenario, but with more ledger entries and less slingshots.

Bonus jab: At least the Swiss can still count on bankers charging 1% fees to hide assets from both sides of the conflict.

SNB cuts interest rate as inflation falls

Last week, the Swiss National Bank lowered its main interest rate by 0.25% to combat the business risks. This decision was made to support price stability and growth.

Several economists now believe the central bank will go even bigger. Some predict the SNB could lower its policy rate to zero at its June policy review should the economic picture darken.

The strong franc is one of the biggest concerns for the SNB. With investors rushing toward SAFE assets amid global anxiety, the franc has been getting stronger — and that is a problem.

A stronger franc makes Swiss exports more expensive, can damage businesses, and cause lower inflation or even deflation.

Schlegel also gave public reassurance that the SNB is prepared to take action. But he emphasized that the aim is to keep monetary conditions stable — not to target any specific exchange rate.

This cautious tone reflects Switzerland’s declining inflation. The rate dipped to 0.3% in February from 0.7% in November as electricity prices fell.

Shareholders voice climate concerns

As the SNB convened for their meeting earlier today in Bern, the economy certainly took center stage. Still, shareholders made it clear that they also have a strong opinion about the SNB’s climate policy.

Climate activists protesting outside the meeting in Madrid had also gathered on Saturday. About 20 people gathered at 9:30 a.m. local time, holding up placards of Schlegel’s face and the slogan “burn, baby, burn“ to protest the SNB‘s alleged inaction on climate change.

The Climate Seniors Switzerland group’s Anne-Käthi Zweidler was among the most outspoken protesters on the board. She asked whether the SNB was truly acting in the country’s interests by investing billions in companies driving climate change.

Schlegel said the SNB’s primary concern is the maintenance of price stability. He said the bank doesn’t establish environmental targets for its investments because they aren’t requirements under its legal mandate.

He added that the SNB would work to reduce emissions from its operations to net zero but must keep its eye on the central bank’s mothership of monetary policy above all.

This response, however, didn’t cut it for the activists. A handful of protesters chanted slogans like “burn, baby, burn” outside the venue in protest of what they saw as inaction on climate change.

Shareholders and critics have expressed frustration over the SNB’s modest dividend payouts. With a target range of just 1% to 2%, the rate is considered low for a central bank, suggesting that the SNB’s balance sheet is more flexible than its peers when measured against GDP. Despite generating nearly 16 billion francs in distributable profit last year, the SNB paid out only 1.5 million francs in dividends.

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