Swiss National Bank keeps key rate at 0% — CNBC

The Swiss National Bank on Thursday kept its key interest rate at 0%. The decision differs from the course taken by the central banks of Switzerland’s main trading partners, including the European Central Bank, the U.S. Federal Reserve and the Bank of Japan, which have already begun raising rates to curb inflation, CNBC reports.

Low inflation and a strong franc

In August, annual inflation in Switzerland accelerated to 0.8% due to higher prices for gasoline, diesel fuel and heating oil. At the same time, this figure remains significantly below inflation levels in the United States, the United Kingdom and the eurozone. The Swiss National Bank’s target is to keep inflation within a range of 0% to 2%.

One factor behind low inflation is the Swiss franc’s status as a safe-haven currency. A stronger franc makes imports cheaper, which is important for the country’s economy, and creates deflationary pressure. In 2025, the franc strengthened by more than 12% against the U.S. dollar amid market volatility, but this year the dollar has partly recovered, gaining about 4% against the Swiss currency.

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Market expectations of a hike

Despite the current decision, traders expect the regulator to eventually begin a monetary tightening cycle. The market assesses the probability of a rate hike or of keeping it unchanged in December as nearly equal, while the probability of hikes beginning by early 2027 exceeds 90%.

According to LSEG, market participants are pricing in an increase in the key rate to at least 0.75% by September next year. UBS economists had previously expected a hike in June 2027, but noted that a weaker franc, high oil prices and the resilience of the U.S. and eurozone economies could bring such a decision closer. Since the Swiss National Bank’s June meeting, the franc has weakened by more than 2% against the euro and by more than 1% against the U.S. dollar.

Features of the Swiss economy

Gideon Tumong, head of the finance specialization at HIM Business School, said that inflows of foreign capital support the franc and help contain imported inflation. Energy accounts for about 3.5% of Switzerland’s inflation basket, compared with about 7% in the eurozone. According to Antonio Fatas, an INSEAD economics professor and external consultant to the IMF, Switzerland’s long history of low inflation also keeps inflation expectations low.