Key Takeaways
- The Swiss National Bank (SNB) maintained its policy rate at 0.00%, signaling a cautious stance amidst global economic uncertainties and the dampening effect of US tariffs.
- Global economic growth is anticipated to remain subdued in the coming quarters, primarily due to US tariffs curbing global trade and ongoing high uncertainty impacting corporate investment activities.
- Copper prices remain elevated as investors monitor potential supply disruptions from Freeport-McMoRan's Grasberg mine in Indonesia, which has declared force majeure following a mud flow incident.
- German economic institutes have slightly revised up their 2025 growth forecast to 0.2%, while maintaining projections of 1.3% for 2026 and foreseeing 1.4% growth in 2027.
- China has added three more US firms to its unreliable entities list, further escalating trade tensions with the United States, even as a German car association welcomes a reduction in US tariffs.
SNB Holds Rates Amidst Deteriorating Global Outlook
The Swiss National Bank (SNB) has opted to keep its policy interest rate unchanged at 0.00%, a decision widely anticipated by markets. This marks the first time the SNB has held rates steady after six consecutive cuts since March of last year. The central bank affirmed its readiness to intervene in foreign exchange markets as needed and will remunerate sight deposits at the policy rate level.
SNB Chairman Martin Schlegel emphasized that inflationary pressure is "virtually unchanged" from the previous quarter, with uncertainty regarding inflation and economic development remaining elevated. The SNB's inflation forecasts project 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027, with Q2 2028 inflation estimated at 0.8%, all remaining within the price stability range.
Vice Chairman Martin noted that global economic growth slowed in the first half of 2025, particularly in the US. He attributed this slowdown to US tariffs and persistent high uncertainty, which negatively impacts companies' investment activities. The SNB anticipates subdued growth in the global economy in the coming quarters, with US tariffs expected to curb global trade and reduce the purchasing power of US households. The Swiss GDP forecast for 2025 is around 1-1.5% (previously 1.0-1.5%), while the 2026 forecast has been adjusted to just under 1% (previously 1.0-1.5%), reflecting the impact of tariffs and uncertainty.
Trade Tensions Escalate as China Blacklists US Firms
Trade relations between the US and China continue to be a focal point, with China adding three more US firms to its unreliable entities list. This move comes as China urges the US to scrap "unreasonable" tariffs. Conversely, the German Car Association VDA welcomed the "important step" of a reduction in US tariffs effective August 1.
The US Department of Commerce has initiated Section 232 investigations into imports of pharmaceuticals, semiconductors, and other medical technology, citing national security concerns. Philips (PHG) has stated that it does not anticipate any immediate operational or financial impact from the US 232 investigation into the medical technology sector.
German Economy Sees Modest Uplift, Eurozone Money Supply Declines
German economic institutes have slightly raised their forecast for 2025 economic growth to 0.2%, an increase from their previous projection of 0.1%. Their forecasts for 2026 remain at 1.3% growth, with a new projection of 1.4% for 2027.
In the Eurozone, the M3 Money Supply (Year-on-Year) for August registered 2.9%, falling short of the estimated 3.3% and down from the previous month's 3.4%.
Copper Prices Elevated Amid Mine Disruption
Copper prices are holding firm at high levels as market participants closely monitor potential supply disruptions from Freeport-McMoRan's (FCX) Grasberg mine in Indonesia. The mining giant declared force majeure on contracted supplies following a mud rush incident that led to fatalities and missing workers, significantly impacting production. The Grasberg Block Cave mine is a major global copper source, and the disruption is exacerbating already tight supply conditions.
In other corporate news, Xiaomi (1810.HK) has initiated a recall of 17,000 power banks due to safety concerns.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.