Swiss National Bank Keeps Benchmark Interest Rate on Hold

Today, the SNB (Swiss National Bank) kept its key benchmark interest rate unchanged at 0%, as it continues to assess the impact on the economy of the tariffs imposed by United States President Donald Trump. The zero percent interest rate is the lowest among all major central banks and reflects the monetary policy of the SNB and the unique position of Switzerland’s economy. Money markets were not surprised by the interest rate hold (the first in seven meetings), but experts advise that, apart from tariffs dimming the outlook for the economy in 2026, there has been a small uptick in inflation in recent months.

Following the first monetary policy decision since Switzerland was hit with 39% tariffs in August this year, officials from the SNB noted that they expect growth in 2026 to be just under 1%, with unemployment likely to continue rising. Experts also suggest that the interest rate hold was also down to the stability of the Swiss Franc and also reflects the return of inflation that is still within the SNB’s target range of 0% – 2%, but is expected to move closer to the 1% mark in the next few years, having returned from negativity in May of this year.

The Chairman of the SNB, Martin Schlegel said, “Inflationary pressure is virtually unchanged compared to the previous quarter and we will continue to monitor the situation and adjust our monetary policy, if necessary, to ensure price stability”. The Chairman, with regard to interest rates, has said repeatedly that there are problems with reintroducing negative interest rates, which were in play between December 2014 to September 2022, which initiated concerns from both pension funds and savers.

Officials from the SNB also advised that Swiss companies doing business in the watchmaking and machinery sectors have been especially affected by tariffs, but the impact elsewhere, particularly in services has been limited. They also went on to say “The economic outlook for Switzerland has deteriorated due to significantly higher U.S. tariffs, which are likely to dampen exports and investment, especially“.

After the announcement, the Swiss Franc was broadly unchanged against the Euro and the US Dollar. Since January of this year, the Swiss Franc has rallied against the US Dollar and the Euro and has approached its highest level in almost a decade as investors have treated the currency as a safe haven in times of uncertainty. Furthermore, analysts advise that data released shows that since the beginning of the year, the Swiss Franc has rallied over 12% against the dollar and circa 1% against the Euro, making it one of the best-performing G-10* currencies of 2025.

*G-10 – A forum of eleven economically advanced nations that consult on economic and financial matters, such as international financial stability. 

Purpose

To foster cooperation and address emerging financial risks, especially concerning the International Monetary Fund (IMF).

History

The group formed from an agreement to provide the IMF with additional funds through the General Arrangements to Borrow (GAB). 

Membership

Includes Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States.