SNB keeps policy rate at 0 percent
The Swiss National Bank (SNB) has kept its policy rate unchanged at 0 percent. The decision reflects stable medium-term inflation pressure despite recent energy price increases.
Inflation rises, policy holds
The SNB is maintaining its policy rate at 0 percent.
Bank sight deposits up to a certain limit will continue to be remunerated at this rate, with a discount of 0.25 percentage points applied to balances above this threshold.
The central bank also reiterated its readiness to intervene in the foreign exchange market if necessary, aiming to counter a rapid and excessive appreciation of the Swiss franc that could jeopardize price stability.
Inflation in Switzerland increased from 0.1 percent in February to 0.6 percent in May, primarily driven by higher petroleum product prices.
Other goods and services contributed little to this rise.
Despite the recent increase, the SNB assesses medium-term inflation pressure as virtually unchanged since its last assessment, affirming its monetary policy as appropriate to maintain price stability and support economic development.
Global slowdown, domestic resilience
The SNB's conditional inflation forecast anticipates a slight increase in inflation over the coming quarters, followed by a decline in the first half of 2027 as the impact of higher energy prices subsides.
The forecast, which assumes the SNB policy rate remains at 0 percent throughout the projection horizon, shows average annual inflation at 0.6 percent for 2026 and 2027, and 0.7 percent for 2028.
Globally, economic momentum slowed slightly in Q1 due to the Middle East escalation and rising energy prices, leading to significant inflation increases in many countries.
The Eurozone saw rate hikes, while US rates remained unchanged.
Switzerland's economy, however, showed resilience, with solid GDP growth in the first quarter despite the global backdrop.
The SNB expects Swiss GDP growth of around 1 percent for 2026 and 1.5 percent for 2027.
Cautious stability in uncertain times
The SNB's decision to hold rates, while seemingly routine, underscores the persistent global uncertainties.
While inflation is currently low, the bank's readiness to intervene in the FX market signals a proactive stance against potential franc appreciation.
This cautious approach balances domestic price stability with external economic pressures, but its effectiveness hinges on the unpredictable geopolitical landscape.