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The Swiss National Bank has cut interest rates by a quarter point to zero but did not go so far as negative rates, as it battles to restrain its currency, which has surged on global trade tensions. 

It is the first time that the Alpine country, which is one of the few globally to experiment with negative rates, has an interest rate of zero as it tackles lagging inflation and a surging Swiss franc, a haven currency that investors have bought up amid US President Donald Trump’s trade war.

The cut comes after annual inflation in Switzerland dipped to minus 0.1 per cent in May, the first negative reading in four years. The appreciating Swiss franc — up 10 per cent against the dollar this year — has slashed the cost of imports, dragging down consumer prices.

The Swiss franc strengthened after Thursday’s expected cut, with the dollar down 0.2 per cent against the franc by afternoon trading at SFr0.817.

A minority of traders had been betting on a larger, half-point cut, according to levels implied by the swaps markets. The franc’s rally after Thursday’s decision was prompted by those bets being “unwound”, said analysts at BBH.

SNB chair Martin Schlegel said at a press conference that the bank would “not take a decision to go negative lightly”. The central bank would also have to take into account the interests of savers, pension funds and others, he said.

Traders slightly trimmed their bets on further rate cuts after Schlegel’s remarks, and were putting a roughly 60 per cent chance that the SNB will cut again to minus 0.25 per cent by March next year.

Switzerland’s two-year government bond yields, which are sensitive to movements in rate expectations, rose 0.09 percentage points to minus 0.10 per cent.

The SNB has also repeatedly flagged financial stability risks from soaring valuations for Swiss property in a lower interest rate environment.

Schlegel did not, however, rule out a move into negative territory, with global trade turmoil possibly forcing the bank down that path in the months ahead.

“It sounds like they are going to play it by ear, which slightly dents market conviction on negative rates,” said Francesco Pesole, an FX strategist at ING.

The so-called Swissie’s sharp rise this year has complicated policymaking. The SNB is attempting to ease pressure without triggering accusations of currency manipulation from the US, which placed Switzerland on a watchlist during Trump’s first term. Analysts say rate cuts are a diplomatically safer route than direct FX intervention. 

The SNB’s decision contrasts with the Federal Reserve’s continued wait-and-see approach. The Bank of England also held rates at 4.25 per cent at its latest meeting.

However, Norway’s central bank unexpectedly cut borrowing costs on Thursday, loosening monetary policy for the first time since the start of the Covid-19 pandemic. The strength of the economy in western Europe’s largest oil and gas producer had led it to keep rates higher than nearly all its neighbours, including Sweden’s Riksbank and the European Central Bank. But Norges Bank decided that the inflation outlook was subdued enough that it could cut rates by a quarter point to 4.25 per cent. 

Switzerland first introduced negative interest rates in December 2014, when the SNB set the deposit rate at minus 0.25 per cent to stem the franc’s appreciation amid safe-haven inflows.

The SNB at one stage pushed the rate down to minus 0.75 per cent, the lowest level in the world. The policy remained in place for more than seven years, also making it one of the world’s longest negative rate periods until it exited it in 2022. 

Thursday’s cut creates a potentially tricky situation for Swiss banks. They no longer earn interest on their reserves with the SNB but theoretically have less justification to pass that cost on to customers.

Daniel Kalt, chief economist at UBS, the country’s largest bank, said zero per cent was probably the most difficult scenario for banks.

“In terms of pressure on net interest margins, it couldn’t be worse than with the situation we have today. With this, it is hard for banks to justify charging customers fees like they did during the previous period of negative interest rates,” Kalt said.

Today is Juneteenth, the day in 1865 when U.S. Army troops arrived in Galveston, Texas, to inform some of the last enslaved Americans that they were free.

They were enforcing the Emancipation Proclamation, which President Abraham Lincoln had issued more than two years earlier, on Jan. 1, 1863.

Various events were planned across the country and some took the current politically and racially charged climate into account.

In Bend, Ore., planners of the annual Juneteenth festival said they took a different approach this year.

“Cautious. Cautious would probably be a good word,” Kenneth Adams, one of the planners, said of holding this year’s event at a public park.

He and other organizers were concerned about safety.

“Given the nationwide climate, we are heavily about making sure that people are safe,” Adams said.

They canceled the event. Another group revived it, smaller and indoors.

In West Virginia, Gov. Jim Justice said state employees would no longer get Juneteenth as a paid holiday. That includes Ray Whiting, who has helped plan a Juneteenth parade and festival in Charleston for the past four years.

“I am disappointed in the governor’s decision,” Whiting said.

“So we moved the event to Friday. That way people won’t miss [it]. And all parties can celebrate.”

In Denver, Norman Harris has organized the city’s Juneteenth Music Festival since 2012. This year, it was just one day instead of two.

Norman Harris III, organizer of Juneteenth Music Festival, poses for a portrait at Brother Jeff’s Cultural Center in Five Point Denver, Colorado on Friday, June 4, 2021.

Hyoung Chang/MediaNews Group/Denver Post via Getty Images

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“We had a number of corporate partners who have been supporting us over the years who either pulled back their support or just were not there this year,” Harris said.

Still, with help from individual donors, he expected it to be “a cultural treasure chest where people are immersed in Black culture and celebrating Black excellence.”

In Nashville, organizers of the “Juneteenth615” festival say it’s their biggest year yet. Willie Sims, known as Big Fella, says skipping the celebration isn’t an option.

“So everybody, what if they cancel Juneteenth? I’m like, you can’t cancel Juneteenth. There’s been communities celebrating this since 1866. Like, when you actually go and say, we’re going to cancel it, I think you’re literally going to bring more of a light to it.”

Click the audio player to hear NPR staff read the text of the Emancipation Proclamation.

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Donald Trump has made his most explicit comments yet about possible US military action against Iran, saying that the next week would be “very big” in determining the course of the war between Israel and the Islamic republic.

Speaking after Iran’s supreme leader Ayatollah Ali Khamenei warned Washington of “irreparable damage” if it intervened, Trump suggested Tehran wanted to negotiate but had left it perilously late.

“I may do it. I may not do it. I mean, nobody knows what I’m going to do,” Trump said at the White House on Wednesday morning, a day after receiving a Situation Room briefing on the conflict.

“The next week is going to be very big — maybe less than a week,” he added in remarks that hinted at a possible timeframe for the US decision.

Hours later, Israeli Prime Minister Benjamin Netanyahu said in a statement that he had a “very warm” conversation with Trump on Tuesday night.

Netanyahu said Israel was “advancing step by step” to remove Iran’s nuclear and ballistic missile threats, adding: “We are attacking nuclear installations, missiles, command centres and the symbols of the regime.”

But he also acknowledged that Israel was “sustaining many losses, painful losses” from Iran’s missile strikes. 

The Pentagon on Monday ordered the USS Nimitz aircraft carrier and three missile-guided destroyers to redeploy from the South China Sea to the Middle East, a journey that is likely to take about a week.

The US president said he had not given Netanyahu any indication of greater US involvement in the strikes against Iran.

But he said he had told Netanyahu to “keep going” with his attacks.

Trump added that Tehran, which was engaged in indirect talks with Washington over its nuclear programme before Israel launched its war, had suggested sending a delegation to the White House for talks. He described the move as “courageous”, even though he said Iran was “totally defenceless” and in an “unsustainable” position.

“Iran’s got a lot of trouble and they want to negotiate,” he said, adding that he had told the Iranians “it’s very late to be talking”, while cautioning “nothing’s too late.”

Oil prices fell after Trump’s remarks, which investors saw as potentially dovish, with the Brent crude benchmark down 2 per cent from Tuesday’s close, before it pared back some of its losses.

However, Iran’s mission to the UN denied Trump’s account, posting on X: “No Iranian official has ever asked to grovel at the gates of the White House . . . Iran does NOT negotiate under duress.”

In a televised message to the Iranian people earlier in the day, Khamenei hit out at Trump’s call for Tehran’s “unconditional surrender”, which the US president suggests would mean the complete destruction of the country’s nuclear programme.

Israel says the programme is aimed at developing a weapon, although Iran says it is purely peaceful.

“Those with wisdom who know Iran, its people and history, will never use the language of threat to address this nation because they will never surrender,” the Iranian supreme leader said.

“The Americans should know that any US military engagement will undoubtedly result in irreparable damage,” he added.

When asked about Khamenei’s comments, Trump said: “I say, ‘good luck’.”

Testifying before Congress on Wednesday, US defence secretary Pete Hegseth said the Pentagon “stands ready to execute” any decision the president makes about going to war, though he declined to say whether the Pentagon would assist Israel in striking Iran.

“President Trump’s word means something. The world understands that. And at the defence department our job is to stand ready and prepared with options,” Hegseth said. “We already have in many ways . . . re-established deterrence. The question is, in the coming days exactly what direction that goes.”

Should Trump decide to involve the US more directly, he could make the most decisive difference by striking Fordow, a key Iranian nuclear facility buried half a kilometre beneath a mountain, with US B-2 bombers and 30,000-pound GBU-57 massive ordnance penetrators, known as “bunker busters”.

Earlier on Wednesday, Israel said it had hit a production site to make centrifuges to enrich uranium — a process that can yield both nuclear fuel and weapons-grade material — as well as sites manufacturing parts for surface-to-surface and surface-to-air missiles.

Later in the evening, an Iranian missile salvo targeted Tel Aviv and central Israel, with early reports suggesting all the projectiles had been intercepted.

Additional reporting by Demetri Sevastopulo in Washington, Neri Zilber in Tel Aviv and Andrew England in London