Eurodollar University You Won’t Believe What The Swiss Central Bank Just Said
Dec 10, 2025
Swiss central bankers are caught between negative interest rates and falling consumer prices, with the CPI dropping for four consecutive months. This situation reflects broader global disinflationary trends. Despite cuts, the Swiss National Bank has struggled to stimulate real growth, leading to rising unemployment. Markets are anticipating further negative rates, even as central banks shift their focus to inflation narratives. Ultimately, Switzerland's economic struggles may serve as a crucial warning signal for the global economy.
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Switzerland As A Global Bellwether
- Switzerland's economy is signaling global disinflation with four consecutive months of negative CPI in November.
- Jeff Snider argues this Swiss pattern reflects a wider, synchronized global slowdown, not isolated Swiss weakness.
Rate Cuts Signal Weakness, Not Cure
- Rate cuts are reactive signals of economic weakness rather than proactive stimulants.
- The Swiss National Bank's cuts failed to prevent negative consumer prices, showing policy rates don't reliably spur inflation.
Negative Rates Hurt Banks, Not Growth
- Negative policy rates harm banks by penalizing liquidity and forcing unwanted risk-taking.
- Schlegel resists negative policy rates because NERP intentionally damages the banking sector for little economic gain.