Swiss policy rate held at 0% as SNB prepares for franc appreciation

The Swiss National Bank (SNB) has kept its policy rate unchanged at 0 percent.

Sight deposits held by banks at the SNB are remunerated at the policy rate up to a certain limit, with a discount of 0.25 percentage points applied to balances above this threshold.

Amidst the ongoing conflict in the Middle East, the SNB has heightened its readiness to intervene in the foreign exchange market.

This measure aims to counteract a rapid and excessive appreciation of the Swiss franc, which could jeopardize price stability in Switzerland.

Inflation has risen slightly as expected since the last assessment, moving from 0.0 percent in November to 0.1 percent in February, primarily driven by higher goods inflation.

The conditional inflation forecast for the coming quarters is higher than in December due to rising energy prices.

The SNB's conditional inflation forecast, assuming a constant 0 percent policy rate, projects annual averages of 0.5 percent for 2026, 0.5 percent for 2027, and 0.6 percent for 2028.

The global economic outlook faces significant uncertainty from the Middle East conflict, which could elevate energy prices, increase inflation, and slow global growth.

For Switzerland, GDP rebounded in Q4, and the SNB forecasts around 1 percent growth for 2026 and 1.5 percent for 2027.

Global developments, particularly the Middle East situation, remain the primary risk for the Swiss economy.