Swiss National Bank holds rates in September

Latest bank decision: At its meeting on 25 September, the Swiss National Bank (SNB) held the policy rate at 0.00%.

SNB in wait-and-see mode: The Bank’s decision to hold was likely motivated by the desire to assess the impact of the 175 basis points of rate cuts implemented since early last year. The European Central Bank’s decision to keep rates unchanged earlier in September was likely also a factor; had the ECB cut rates, this could have pressured the SNB to keep cutting to avoid the franc appreciating.

Policy outlook: Most panelists see rates on hold at 0.00% through to end-2026, though several others see a final 25 basis-point cut in order to support price pressures, and one sees a 25 basis-point rate hike. The risks appear tilted towards further easing, due to extremely low inflation and a weak GDP growth outlook.

Panelist insight: ING analysts said: “In our view, there’s a risk that inflation could be undershooting the SNB’s forecasts in the coming months. In August, both imported and domestic goods prices fell by 0.1% month-on-month, and service prices also declined. With global energy prices still low and Swiss growth slowing, annual inflation could edge closer to 0% or even turn negative again. At this stage, it’s clear the SNB would prefer to avoid returning to negative rates, and we do not expect further rate cuts. However, the door to future easing remains ajar. A sharper-than-expected deterioration in the economic outlook could quickly bring rate cuts back into the conversation.” 

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