Swiss Central Bank Holds Rate at 0% for Fifth Consecutive Time, Softens Intervention Language

The Swiss National Bank (SNB) announced on Thursday (24th) that it would keep its key policy interest rate unchanged at 0%, marking the fifth consecutive meeting without a rate change, consistent with market expectations. While central banks of major trading partners—the U.S. Federal Reserve, European Central Bank, and Bank of Japan—have initiated tightening cycles, the SNB has opted to maintain its current stance.

Following the decision, the Swiss franc depreciated 0.3% against the U.S. dollar, trading at 1.2077 francs per dollar. Meanwhile, the yield on Swiss 10-year government bonds remained stable around 0.57%, approaching recent highs.

Switzerland’s August consumer price index (CPI) rose 0.8% year-on-year, rebounding due to escalating Middle East tensions and rising international oil prices. However, this remains within the SNB’s inflation target range of 0% to 2%. The SNB forecasts average inflation of 0.7% in 2026, and 0.8% in both 2027 and 2028.

On foreign exchange intervention, the SNB softened its previous strong language about “increasing willingness to intervene,” shifting instead to “taking action in foreign exchange markets when necessary.”

Regarding policy direction, SNB Chairman Martin Schlegel stated that medium-term inflationary pressures have only slightly increased, and the current 0% interest rate environment remains appropriate.

Schlegel noted that earlier, amid heightened tensions involving Iran, safe-haven capital inflows prompted strong intervention by the SNB to prevent a sharp appreciation of the franc. With the franc recently weakening, the central bank has shifted its strategy to adjusting foreign exchange participation as needed. In response to global rate hikes, he emphasized: "We are setting monetary policy for Switzerland."

Economists from UBS Group pointed out in a research report that since the June meeting, the franc has depreciated over 2% against the euro and over 1% against the dollar, combined with persistently high oil prices, significantly increasing the likelihood of an early rate hike. They warned, "The Swiss National Bank has a history of surprising markets."

Gedeon Tumong, Head of Finance at HIM Business School Switzerland, analyzed that Switzerland benefits from a "safe-haven premium," where foreign capital inflows support the franc and reduce imported inflation. Additionally, Switzerland's strict "fiscal debt brake mechanism" means it does not need to raise bond yields to attract investors, allowing it to sustain ultra-low interest rates.