The Swiss National Bank warns of upcoming challenges.. Will the economy withstand the trade tensions?

Martin Schlegel, the Governor of the Swiss National Bank, warned that an economic slowdown in Switzerland remains a plausible risk amid escalating global uncertainties, noting that the uncertainty surrounding trade policies casts a shadow over both domestic and international economic performance.

Schlegel explained that the current state of global trade policy is causing "a high degree of uncertainty" not only in major economies but also extends to countries like Switzerland, which rely on trade openness and financial stability. He added that this ambiguity could lead to a fragmentation of the global economy, posing a significant challenge to the smooth flow of cross-border trade and investment.

While the importance of maintaining price stability is crucial, the Governor of the Swiss National Bank emphasized that this stability alone is insufficient to contain the risks arising from trade tensions. He clarified that price stability remains a core element of monetary policy but does not eliminate the prevailing sense of doubt and uncertainty in the markets amid volatile trade policies.

Regarding the tools of the Swiss National Bank, Schlegel pointed out that interest rates remain the primary tool for managing monetary conditions, but he did not rule out the use of other instruments such as interventions in the foreign exchange market when necessary, to support the stability of the Swiss franc and mitigate the impact of external shocks on the national economy.

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Monetary Policy Statement issued by the Swiss National Bank - March 2025