SNB Unexpectedly Cuts Policy Rate

The Swiss National Bank kept its policy rate unchanged at 0% in March 2026, maintaining remuneration on sight deposits up to a set threshold, with a 0.25 percentage point discount applied above it. Amid the Middle East conflict, the SNB signaled a greater willingness to intervene in currency markets to prevent excessive Swiss franc appreciation and protect price stability. Inflation has edged up slightly, reaching 0.1% in February, with higher energy prices expected to push it further in the near term, though medium term pressures remain stable. The SNB forecasts average inflation at 0.5% in 2026 and 2027, and 0.6% in 2028. While global growth was solid late last year, rising energy costs and geopolitical tensions are increasing uncertainty and may slow activity. Switzerland’s economy showed modest growth, with GDP rebounding in the fourth quarter, and is expected to expand around 1% in 2026, though risks remain tied to global conditions.

The Swiss National Bank left its policy rate at 0% in its final meeting of the year and maintained the 0.25-percentage-point charge on sight deposits above the set threshold. It also reaffirmed its readiness to intervene in the foreign exchange market if needed. Inflation remained subdued, slipping to 0.0% in November from 0.2% in August due to lower prices for hotels, rents, and clothing. Assuming no change in the policy rate, the SNB expects inflation at 0.2% in 2025, 0.3% in 2026, and 0.6% in 2027. Meanwhile, Swiss GDP contracted in Q3, mainly reflecting a correction in pharmaceuticals after front-loaded exports to the US, while other industries and services posted slight gains. The SNB now sees GDP growth near 1.5% in 2025, slightly above its earlier range of 1% to 1.5%, and around 1% in 2026, compared with its previous projection of just under 1%. It also expects a modest increase in unemployment as overall economic momentum remains muted.

The Swiss National Bank left its policy rate unchanged at 0%, maintaining the 0.25 percentage point discount on sight deposits above the set threshold, and reaffirmed its readiness to intervene in foreign exchange markets if needed. Inflationary pressure remains subdued, with inflation edging up to 0.2% in August from -0.1% in May, driven mainly by tourism and imported goods. The SNB projects inflation at 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027, assuming the policy rate stays at 0%. Global growth slowed in early 2025, weighed down by US tariffs and uncertainty, with the SNB expecting subdued expansion ahead. In Switzerland, GDP growth softened to 0.5% in Q2 after a strong Q1 boosted by pharmaceutical exports. Higher US tariffs are set to dampen exports and investment, particularly in machinery and watchmaking, while services remain resilient. The SNB forecasts 1–1.5% GDP growth in 2025, slowing to just under 1% in 2026, with unemployment expected to rise further.