Swiss National Bank holds rates as expected, sees inflation largely contained

The Swiss National Bank kept its benchmark interest rate on hold on Thursday, resisting pressure to counter rising inflation caused by war in the Middle East which has seen ‌other central banks hike borrowing costs. The SNB kept its policy rate at 0%, as forecast by all economists polled by Reuters, as well as markets.

"Medium-term inflationary pressure has increased only slightly. Monetary policy is appropriate to keep inflation within the range consistent with price stability and supports economic development," the SNB said in a statement. The SNB said inflation would likely ‌climb somewhat higher in the fourth quarter, before declining again in the course of 2027 as a recent spike in energy price pressures eased.

NEW LANGUAGE ON INTERVENTIONS The ‌central bank also said it is willing to be active in the foreign exchange market as necessary to ensure appropriate monetary conditions.

Previously it said it had an increased willingness to intervene in the foreign exchange markets to counter an excessive appreciation of the franc. The currency has weakened against the euro and the dollar in recent weeks. The Swiss franc weakened slightly after the decision, to trade roughly flat against the euro ⁠at 0.9395 ​francs and at 0.8247 francs against the US ⁠dollar.

The Swiss central bank has kept its policy rate at 0%, the lowest among major central banks, since June 2025, despite Swiss inflation accelerating to its highest level in two years. Still, the acceleration in ⁠inflation to 0.8% in August, driven by surging fuel prices stemming from the conflict in Iran, was well within the SNB's target range of 0%-2%, which it calls price stability.

This allowed SNB to ​keep its benchmark rate unaltered, contrasting with the European Central Bank which earlier this month raised rates. So too did the US Federal Reserve, which signalled more ⁠rate increases were on the way. Although the Bank of England last week kept its interest rates unchanged, it warned they may have to go up if the Iran war drags on and pushes energy prices ⁠higher.

BRIGHTER ​GROWTH OUTLOOK Analysts were unsurprised by the SNB's decision to keep rates on hold.

"Swiss inflation is clearly under control and is not broad-based, being driven mainly by higher fuel prices, so there was no need for the SNB to raise rates," said Charlotte de Montpellier, senior economist at ING Bank. "I think the SNB will stay at the ⁠current level for some time – while other central banks are facing higher inflation, this is not an issue for the SNB."

The SNB nudged up its inflation forecasts for ⁠the coming months, predicting it would average 1.2% ⁠in the final quarter of this year and the first quarter of 2027, before easing again. In 2027, it now expects inflation to average 0.8%, an increase of 0.2 percentage points from its June forecast.

It also predicted economic growth will be stronger ‌than previously forecast this year at ‌between 1.5% and 2% following an unexpectedly robust performance in the second quarter.