The Swiss National Bank left its policy rate unchanged at 0.00% at its September 2025 monetary policy assessment, delivering the first pause in a rate cycle that had produced six consecutive reductions stretching back to March 2024. The decision, announced on 25 September in Berne, marks a meaningful turning point in the SNB's easing trajectory, with the Governing Board opting to assess the cumulative impact of its prior reductions rather than extending the sequence by moving into negative territory. The hold had been widely anticipated by market participants following the bank's arrival at the zero lower bound in June 2025.
Policymakers cited the potential impact of United States tariffs on Swiss exports as a key risk weighing on the economic outlook, a reference that reflects the open and trade-dependent nature of the Swiss economy. Switzerland's manufacturing and precision industries are deeply integrated into global supply chains, and any sustained increase in barriers to the American market represents a material headwind for Swiss exporters and the domestic employment base that depends on them. The SNB's decision to hold, rather than pre-emptively cut further, suggests it judged the current rate as appropriate given this balance of external risks.
SIX CUTS IN SEQUENCE SINCE MARCH 2024
The SNB began lowering rates in March 2024 in response to falling Swiss inflation and the persistent strength of the franc, which has historically appreciated in periods of global risk aversion and squeezed the country's export-oriented industrial base. Each of the six reductions moved the policy rate lower in increments of 25 basis points, bringing the benchmark from a positive level down to zero by June 2025. The speed and consistency of the easing cycle set the SNB apart from most of its developed-market peers and reflected the particular vulnerability of a small, open, haven-currency economy to disinflationary impulses originating in the external environment.
Having reached the zero lower bound in June, the SNB paused rather than entering sub-zero territory in September — a zone the bank had navigated for several years before exiting in 2022 following the global surge in inflation. The September pause suggests policymakers regard 0.00% as an appropriate resting point from which they can observe whether inflation stabilises, re-accelerates modestly, or continues on a downward path that would necessitate the resumption of cuts. The option of negative rates remains available and has not been explicitly ruled out.
US TARIFF RISK AND FRANC DYNAMICS
The explicit reference to US tariff impacts in the SNB's September communication is notable. Swiss exporters in watchmaking, pharmaceuticals, and precision engineering face potential demand headwinds if American importers absorb higher costs imposed by tariff measures, and the franc's safe-haven status means it tends to appreciate precisely in periods of global trade tension, compounding the competitiveness challenge for Swiss businesses already operating with a structurally strong currency.
The SNB retains a well-established toolkit for managing franc strength, including direct intervention in foreign exchange markets and, in extremis, negative interest rates. By holding at zero and highlighting external risks without triggering immediate additional easing, the bank has communicated that it remains watchful and prepared to act. Financial markets will scrutinise incoming data on Swiss inflation, growth indicators, and export volumes, as well as any further developments in US trade policy, to determine whether the September pause proves a brief interlude in an ongoing easing cycle or the beginning of a more sustained period of rate stability at the zero lower bound.