Swiss National Bank Maintains Policy Rate at 0%
Citing Heightened Global Uncertainty
On March 19, 2026, the Swiss National Bank (SNB) announced that it would keep the policy rate unchanged at 0%. Under this policy, banks’ sight deposits held at the SNB are remunerated at the policy rate up to a specific threshold, with a 0.25 percentage point discount applied to deposits that exceed that limit.
Foreign Exchange and Geopolitical Pressures
A major factor influencing current monetary policy is the escalating conflict in the Middle East. In response to this uncertainty, the SNB has increased its willingness to intervene in the foreign exchange market. This strategy is explicitly designed to counter a rapid and excessive appreciation of the Swiss franc, a scenario that would jeopardize the country’s price stability.
Inflation Trends and Forecasts
Observed inflation ticked up slightly from 0.0% in November to 0.1% in February, driven primarily by higher goods inflation. Looking ahead, the short-term conditional inflation forecast has been revised upward since December due to rising energy prices linked to the escalation in the Middle East.
Despite this short-term pressure, medium-term inflationary pressure remains virtually unchanged. In fact, the medium-term forecast is slightly lower than previously expected due to the dampening effect of a stronger Swiss franc. Assuming the policy rate remains at 0%, the SNB projects that inflation will remain safely within the range of price stability, forecasting average annual inflation at 0.5% for 2026, 0.5% for 2027, and 0.6% for 2028.
Economic Growth and Future Outlook
Domestically, the Swiss economy showed resilience recently; GDP returned to growth in the fourth quarter following a previous contraction, and unemployment rates in February remained stable. Looking ahead, the SNB expects Swiss economic growth to be around 1% in 2026, rising to approximately 1.5% in 2027. While shorter-term growth may be somewhat subdued, the bank anticipates a medium-term upturn.
Key Risks to the Global and Swiss Economy
The global economic outlook is currently subject to significant risks. Although global growth was solid in the fourth quarter and key interest rates were left unchanged in major currency areas, the situation in the Middle East remains the primary risk to global and Swiss economic activity. The SNB warned that unexpected spikes in energy prices could substantially constrain economic growth and further drive up inflation across many countries. Additionally, the broader economy faces potential headwinds from supply chain disruptions and ongoing trade policy uncertainties.
In light of these conditions, the SNB noted that its current monetary policy effectively supports economic development while keeping inflation in check. The bank reiterated its commitment to closely monitoring the situation and adjusting its monetary policy as necessary to ensure price stability over the medium term.