Swiss Central Bank Holds Rate at 0% and Ups Factored Inflation Forecasts

Policy Decision and Inflation Trends

The Swiss National Bank left its key interest rate unchanged at 0%, matching market expectations, while upgrading its inflation projections. Inflation rose from 0.6% in May to 0.8% in August, driven primarily by higher oil‑product prices. This push moved goods inflation into positive territory for the first time since May 2024. The SNB noted only a modest increase in medium‑term inflationary pressure and deemed current monetary policy appropriate for maintaining price stability.

Revised Inflation Path

The bank’s inflation forecasts were revised upward across the outlook horizon. The SNB now expects average inflation of 0.7% in 2026, 0.8% in 2027 and 0.8% in 2028, compared with 0.6%, 0.6% and 0.7% in June’s projection. The near‑term adjustment reflects stronger‑than‑expected oil prices, while the weaker Swiss franc contributed to the modest upward revision in the medium term. Energy inflation is still anticipated to ease during 2027, keeping the entire forecast within the central bank’s price‑stability range under a 0% policy rate.

Economic Outlook

Growth expectations remain steady. The SNB forecasts GDP growth of 1.5–2.0% for 2026 and around 1.5% for 2027. It cautioned that the exceptionally strong second‑quarter expansion was inflated by the chemicals and pharmaceuticals sector, and that underlying momentum is more moderate. The bank views the recent franc depreciation as supportive for the economy and retains its readiness to intervene in foreign‑exchange markets as needed. The statement highlights the Middle East conflict and higher energy prices as the main global risks.

Data Summary

Key Takeaways

• The SNB held its policy rate at 0% with no signal of an imminent change.
• Inflation accelerated from 0.6% in May to 0.8% in August, chiefly due to higher oil‑product prices.
• The inflation forecast was raised to 0.7% in 2026, 0.8% in 2027 and 0.8% in 2028.
• The near‑term revision reflects elevated oil prices, while the weaker franc adds modestly to medium‑term inflation expectations.
• Medium‑term inflationary pressure increased only slightly, and the outlook stays within the bank’s stability range.
• Energy inflation is expected to decline in 2027, limiting the case for aggressive policy action.
• GDP growth is projected at 1.5–2.0% for 2026 and around 1.5% for 2027, with underlying momentum seen as moderate.
• The SNB remains prepared to intervene in the foreign‑exchange market, noting the franc’s depreciation already supports economic activity.

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