MNI SNB WATCH: Rates Seen On Hold At Zero

The Swiss National Bank looks certain to keep its policy rate unchanged at 0% this week, with policymakers unwilling to take rates back into negative territory any time soon.

But the SNB board will keep all options open and is unlikely to provide precise guidance on future policy moves. 

Headline inflation has recovered since the last rate cut in June, and sits within the 0-2% target range, with moderate price pressures pointing to a gradual further increase in the coming months and into 2026. The labour market has also seen some signs of stabilisation, and nominal wage growth has accelerated in early 2025. (See MNI SNB WATCH: Back To Zero As Inflation Turns Negative )

RISKS

The main downside risk to inflation remains Swiss franc strength, which has appreciated by more than 10% against the dollar since "Liberation Day".

The impact on GDP and inflation from 39% American tariffs remains uncertain, though the shock appears sustainable for now, partly because pharmaceuticals and gold, which account for more than half of Swiss exports to the U.S., are exempt from the levy.
Sectors in which Swiss companies are market-leaders such as luxury watches and precision mechanics, should also be only moderately affected.

MEDIUM-TERM PRICE STABILTY

SNB President Martin Schlegel has repeatedly emphasised that the key objective of monetary policy remains price stability "in the medium term," so temporary deviations outside the 0-2% target range can be tolerated, implying that the bar for further rate cuts below 0% is currently quite high.

One big change for SNB watchers in this decision cycle will be the inaugural publication of meeting minutes, expected four weeks after the decision, with the aim of increasing transparency. This initiative brings the SNB closer to the established practice of other major central banks, but it is still unclear just how much information will be provided in addition to the policy statement and the post-decision press conference.