Swiss National Bank slashes rates to zero to stop deflation, opening door to negative rates even without crisis. Purchasing power destruction and capital rotation towards commodities are a real thing.

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Zero yields are back!

For those who believed zero and negative interest rates were something of the past. It already happened again, even without a new economic or financial crisis.

The Swiss National Bank cut interest rates to zero today to prevent the Swiss franc from appreciating further and import more deflationary pressures.

With investors and central banks fleeing the US dollar, Swiss franc inflows have been exceptionally strong, pushing down inflation.

In addition, the Swiss central bank signaled it could go even further, likely implementing negative interest rates again.

I have little doubt that when another crisis or recession arrives, central banks won’t hesitate to take rates back to zero or below. Especially since inflation is a must-have in a world where GDP growth is financed by debt!