Swiss National Bank keeps interest rate unchanged at zero

The Swiss National Bank maintained its benchmark interest rate at 0% for a year, despite rising inflation driven by higher fuel costs, in line with market expectations.

The ​Swiss National Bank left ‌its benchmark interest ​rate unchanged on Thursday despite a recent uptick in inflation driven by higher fuel costs stemming from the ‌Iran war. The decision, which extended to a year the period the SNB has kept borrowing costs at 0%, the lowest level among the world's main central banks, ‌was expected by markets and all the analysts polled by Reuters.

"Inflation has risen ‌in recent months as a result of higher energy prices," the SNB said in a statement. "Medium-term inflationary pressure, however, is virtually unchanged compared with the last monetary policy assessment." The Swiss franc fell ⁠slightly ​after the decision, ⁠with the dollar last up 0.11% at 80.03 francs.

In contrast to the SNB, the European Central ⁠Bank already raised rates last week to counter a build-up in price pressures, the first ​major central bank to do so. Meanwhile on Wednesday, the U.S. Federal ⁠Reserve left interest rates unchanged despite inflation stuck well above its target. The Bank of England and ⁠Norway's ​central bank are also due to give policy updates on Thursday, with neither expected to change borrowing costs.

Swiss inflation remained at 0.6% in May, the ⁠highest level since November 2024, driven by a spike in fuel prices, but ⁠core inflation, which excludes ⁠volatile energy costs, remained low at 0.3%. Both readings are well within the SNB's 0%-2% target range which it defines as ‌price ‌stability.