Swiss Central Bank Keeps Rate On Hold

(RTTNews) - The Swiss National Bank left its policy rate unchanged on Thursday as inflation continues to remain well within the target.

The central bank left its policy rate at zero percent, in line with market expectations.

The SNB had lowered the key rate by 175 basis points since March 2024. The bank exited its negative rate in 2022 after holding it steady for over seven years.

"If necessary, the SNB has an increased willingness to intervene in the foreign exchange market," the bank said in a statement.

"The SNB thereby counters a rapid and excessive appreciation of the Swiss franc, which would jeopardize price stability in Switzerland," the bank added.

Citing the impact of higher energy prices, the Swiss central bank raised its inflation forecast for this year to 0.6 percent from 0.5 percent. Inflation is expected to remain at 0.6 percent next year and to rise marginally to 0.7 percent in 2028. The projections for 2027 and 2028 were revised higher by 0.1 percentage point each.

The central bank observed that economic activity in Switzerland has proved to be resilient given the conflict in the Middle East.

The bank maintained its growth outlook for both this year and next. For this year, growth is projected at around 1 percent and about 1.5 percent next year.

Elsewhere, the State Secretariat for Economic Affairs, or SECO, downwardly revised growth forecast for Switzerland. The growth outlook for this year was lowered to 0.9 percent from 1 percent and that for next year to 1.6 percent from 1.7 percent.

The federal government expert group observed that the crisis in the Middle East is driving up energy prices and weighing on the global economy. Uncertainty remains high.

The SECO also projected inflation to be 0.6 percent in both 2026 and 2027.

SNB Chairman Martin Schlegel said uncertainty around inflation and economic development is still high. Therefore, the board continues to monitor the situation and adjust monetary policy if needed, to ensure appropriate monetary conditions.

ING economist Charlotte de Montpellier said today's decision confirms that the SNB remains in a relatively comfortable position. The economist expects policy rates to remain at 0 percent for at least next two years.