MNI SNB WATCH: On Hold At Zero Despite Inflation Outlook

The Swiss National Bank left its key policy rate unchanged at 0% Thursday, adding it was prepared to be active in the forex markets if necessary. The decision had been anticipated by financial markets.

The Board said inflation in recent months "has been slightly lower than expected," while medium-term inflationary pressures are virtually unchanged compared to the September monetary policy assessment.

Speaking after the meeting, President Martin Schlegel said the SNB's conditional inflation forecast was "virtually unchanged in the medium term compared to the previous quarter, and is within the range of price stability over the entire forecast horizon."

"Monetary policy continues to have an expansionary effect, and that the low level of interest rates in Switzerland is having an effect via the exchange rate," he noted. 

"The expansionary effect of our monetary policy is evident in credit growth," he said, adding that monetary policy is "helping to ensure that inflation is likely to rise slowly in the coming quarters.

HIGH BAR

"We will continue to monitor the situation and adjust our monetary policy if necessary, to ensure price stability over the medium term," he said. (see MNI SNB WATCH: Bar Still Set High For Return To Negative Rates )

However, he repeated his pre-meeting warning that the bar to another rate cut was higher with the policy rate at zero.

On the economy, Vice President Petra Tschudin said the outlook has improved slightly due to the lower US tariffs and somewhat better development globally. "For 2025 as a whole, we expect GDP growth of just under 1.5%. For 2026, we expect growth of around 1%. In this environment, unemployment is likely to continue to rise somewhat," she said.