We’re back to ZIRP. In Switzerland.

Swiss monetary policy’s somewhat eccentric. They aim for price stability just like every other developed market monetary authority, but unlike some of its counterparts around the world, the SNB takes its job pretty seriously, particularly the part about preserving the value of the money.

That sounds admirable, and it is, but it means the franc tends toward appreciation at the first excuse. And in a world of habitual currency debasement and escalating geopolitical tension, there are a lot of excuses.

The result’s an SNB engaged in a near constant effort to manage franc strength lest deflation should set in, which it did last month.

As the simple figure shows, consumer prices are back to falling on a YoY basis in Switzerland.

For reference, the SNB targets anything between 0% and 2% annual inflation, and they’re pretty neurotic about keeping things inside that range. Currently, there are good reasons to expect additional unwanted franc strength (everyone’s scared about war, tariffs and so on) which threatens to deepen the nascent deflationary dynamic.

Note that a quarter of the country’s CPI basket is comprised of imports. And import prices for goods fell nearly 2.5% YoY last month. The writing on the wall’s pretty big here.

And so, the SNB cut rates back to zero, ending a 33-month “experiment” in positive rates. “Inflationary pressure has decreased compared to the previous quarter,” the bank said Thursday. “With today’s easing, the SNB is countering the lower inflationary pressure [and] will continue to monitor the situation closely and adjust its monetary policy if necessary.”

The figure gives you a sense of how the bank expects inflation to develop going forward: It’ll be below 1% for the foreseeable future, the SNB reckons. “Without today’s rate cut, the forecast would have been lower,” they remarked.

The goal (one goal) is to discourage franc-buying by creating a wholly unpalatable rates juxtaposition with other advanced economies. But, again, the SNB’s often a victim of its own success: During periods when return of capital trumps considerations of return on capital, you can expect inflows.

(If you’re a reader, the SNB will sell you a book called “The Swiss franc – a success story.” It’s available on their website and it can be yours for just $50. Before you scoff, note that’s actually a bargain in some contexts. For example, it’s $10 less than the cheapest Trump edition Bible.)

Thursday’s decision sets the stage for negative rates in September, and it looks like just a matter of time before the SNB has to start intervening again to cap franc strength. That’ll irritate Donald Trump, even as intervention will mean the SNB buying USD assets. Why Trump cares if the Swiss manage their currency is beyond me. The Swiss economy’s tiny. Putting them on a Treasury list of “manipulators” is asinine.

Anyway, back to ZIRP. That’s the headline on Thursday. In the new statement, the SNB said the outlook for the Swiss economy “remains uncertain.” They blamed Trump. Not by name, of course, but… well, here’s what they said: “Developments abroad continue to represent the main risk.”

To be fair to The White House, that could mean a lot of things, and Credit Suisse notwithstanding, “the main risks” are always “abroad” when you’re Switzerland. (You’re never the problem. You’re Switzerland!)

Meanwhile, the Bank of England left rates on hold in a decision that was notable only for the 6-3 vote split. Long story short (and the short version’s all you need), there was more support for a BoE cut today than markets expected, which means an August reduction’s now guaranteed.

In a statement accompanying the BoE decision, Andrew Bailey said, “The world is highly unpredictable.”