Swiss policy rate held at 0%, FX intervention readiness
The Swiss National Bank's Governing Board decided to leave its policy rate unchanged at 0 percent. The central bank also reiterated its increased willingness to intervene in the foreign exchange market to counter excessive franc appreciation.
Inflationary pressures remain contained
The Swiss National Bank (SNB) maintained its policy rate at 0 percent.
Banks' sight deposits at the SNB will be remunerated up to a certain threshold, with a 0.25 percentage point discount for deposits above it.
The SNB also affirmed an increased willingness to intervene in the foreign exchange market to prevent a rapid and excessive appreciation of the Swiss franc, which could jeopardize price stability.
Inflation has risen from 0.1% in February to 0.6% in May due to higher energy prices, but medium-term inflationary pressure is virtually unchanged.
The SNB's conditional forecast projects average annual inflation at 0.6% for 2026, 0.6% for 2027, and 0.7% for 2028, assuming a 0% policy rate.
Global headwinds, Swiss resilience
Global economic growth was solid in Q1, supported by AI, but slowed due to Middle East tensions and rising energy prices, which dampened purchasing power.
Inflation rose significantly in many countries, prompting euro area rate hikes.
The SNB's baseline expects elevated global inflation short-term, leading to moderate growth before a medium-term pickup.
Switzerland's economy showed resilience, with solid Q1 GDP growth across sectors.
Unemployment rose slightly.
The SNB forecasts Swiss growth of around 1% for 2026 and 1.5% for 2027, with global developments and US trade policy as key risks.
Steady hand in turbulent times
The SNB's decision to hold rates reflects a cautious but pragmatic approach given the external uncertainties.
While domestic inflation remains low, the global energy and geopolitical landscape necessitates vigilance, particularly regarding the franc's exchange rate.
This stance prioritizes stability over proactive easing, signaling a readiness to act decisively if external shocks intensify.