Interest Rates
Money Mixtape
Monday, 24 March 2025 - 6 minutes
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On this week's Money Mixtape with Victor Cianni from Alpian Bank - we talk interest rates:
The Swiss National Bank (SNB) made a surprising move last week by cutting interest rates by another 0.25%, marking the fifth reduction in just 12 months. This brings the policy rate down from 1.75% in March 2024 to just 0.25% today. The SNB adjusts interest rates to control economic growth—raising them to slow inflation or cutting them to boost weak growth. The recent cuts signal that inflation is falling faster than expected, and the strong Swiss franc is weighing on the economy.
While the SNB has not ruled out the possibility of negative interest rates, the economy is still growing moderately, making such a move uncertain for now. The impact of lower rates is clear: savers will see even lower returns, with average savings rates now near zero. On the other hand, borrowers could benefit from cheaper loans, making it an attractive time for mortgages or car loans.
For savers, options are limited but include shopping for banks that delay rate cuts, locking in fixed interest rates, or even considering foreign currencies with higher rates—though this comes with exchange rate risks. Investing is another possibility, though market conditions remain volatile.
Ultimately, the SNB's rapid cuts show its willingness to act swiftly in response to economic shifts. Borrowers should take advantage of lower rates, while savers need to strategize carefully. With uncertainty ahead, staying flexible and prepared for further changes is key.
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