Zero interest rates: good or bad for you?

In its latest interest rate forecast, UBS believes that the SNB’s cycle of interest rate cuts is now likely to be over following the recent reduction to zero percent. UBS cites easing inflationary pressure as the reason for this move. If the economic outlook does not deteriorate further in the coming months, UBS believes that the SNB is likely to have concluded its cycle of interest rate cuts.

It writes: “Fears that the USA’s protectionist trade policy could trigger a significant economic slowdown led to a marked fall in yields on Swiss government bonds and mortgage interest rates until the beginning of May. Since then, however, Swiss interest rates have moved sideways.” Only if the US government tightens its policy further, thereby placing additional strain on the economy, would negative SNB interest rates be conceivable; however, the likelihood of such a scenario has decreased with the recent easing of the tariff dispute, is the forecast from UBS.