SNB keeps policy rate unchanged at 0% and raises growth forecast

The Swiss National Bank (SNB) decided on Thursday to keep its policy rate at 0%, a level unchanged since last June. The central bank justified the decision by pointing to inflation that remains under control in Switzerland.

The SNB said it remains ready to intervene in the foreign exchange market, if necessary, to ensure appropriate monetary conditions. The decision contrasts with those of the US Federal Reserve and the European Central Bank (ECB), which have recently raised their policy rates.

According to the Zurich and Bern-based institution, current monetary policy remains appropriate for keeping inflation within the price stability range of 0% to 2%, while supporting economic activity. The SNB nonetheless pointed to two sources of uncertainty: the direction of international trade policy and exchange rate developments.

Growth forecasts revised upward

In its regular quarterly assessment, the SNB significantly raised its growth forecast for Swiss GDP in 2026, to a range of 1.5% to 2.0%, up from around 1% estimated in mid-June. For 2027, the central bank expects growth of around 1.5%.

Inflation projections were also revised upward, by around ten basis points, for both this year and next: to 0.7% and 0.8% respectively. The cause cited is a sharper-than-expected rise in oil prices. Inflation is then expected to stabilise at this level in 2028.

These estimates, the SNB noted, remain valid only if the policy rate stays at zero throughout the period in question.

For businesses and households in Italian-speaking Switzerland, a policy rate held at 0% means credit remains cheap, but also reduced returns on savings. It remains to be seen what effect international trade uncertainty and exchange rate movements will have on the central bank's future decisions, as it seeks to balance price stability and growth support without fuelling new imbalances.