GENEVA (AP) – The Swiss National Bank (SNB) announced on Thursday a reduction in its target interest rate by a quarter of a percentage point, lowering it from 0.25% to zero. This decision came in response to easing inflationary pressures within the country.

According to the SNB, inflation in Switzerland has remained nearly flat, dipping into negative territory in May compared to figures from February. The central bank attributed the decline in inflation largely to decreasing prices in the tourism and oil sectors. The SNB has now revised its inflation forecast to an annual rate of 0.2% for this year, with an expectation of a gradual increase to 0.5% in the following year and 0.7% by 2027, assuming the target interest rate remains at zero throughout this period.

The SNB stated in its recent report, "In its baseline scenario, the SNB anticipates that growth in the global economy will weaken over the coming quarters." It also noted that inflation in the United States is expected to rise in the short term; however, continued decreases in inflationary pressures are anticipated in Europe.

The bank highlighted that Switzerland experienced "strong" economic growth during the first quarter, primarily driven by increased exports to the United States. This surge was influenced by companies preemptively shipping goods in anticipation of future U.S. tariffs, which may inflate prices of foreign goods for American consumers.

The larger context of this monetary policy shift reflects a broader trend among Western economic powers grappling with current monetary strategies. Many of these nations are confronting a situation where prices have declined in various regions. Yet, they face geopolitical uncertainties—especially concerning conflicts in the oil-rich Middle East—and disruptions caused by U.S. tariffs that have unsettled financial markets in recent months.

In parallel, the U.S. Federal Reserve decided to maintain its key interest rate unchanged in light of ongoing assessments regarding tariffs and other potential economic disruptions. U.S. President Donald Trump has been advocating for the Fed to lower interest rates to stimulate the U.S. economy.

Overall, the Swiss National Bank's decision to lower the interest rate reflects its assessment of local and global economic conditions, with the focus on supporting stability in the Swiss economy amidst prevailing uncertainties.