The Swiss National Bank held its SNB policy rate at 0% at its June monetary policy assessment on Thursday, leaving the benchmark unchanged while flagging a greater willingness to step into foreign exchange markets to counter excessive franc appreciation.
Swiss inflation has risen from 0.1% in February to 0.6% in May, largely reflecting higher oil-related costs. The SNB's updated conditional inflation forecast sees inflation at 0.6% in 2026, 0.6% in 2027 and 0.7% in 2028, keeping the forecast within the range of price stability over the entire forecast horizon, on the assumption that the policy rate stays at 0%.
FX INTERVENTION BACK IN FOCUS
The SNB signalled increased readiness to intervene in the foreign exchange market to counter excessive strength in the franc. The SNB said a rapid and excessive appreciation of the Swiss franc would jeopardise price stability in Switzerland.
It also listed a renewed increase in upward pressure on the Swiss franc among the risks to the Swiss economic outlook.
The SNB said medium-term inflationary pressure was virtually unchanged since its last assessment and that its monetary policy was appropriate to keep inflation within the range consistent with price stability.
GROWTH OF AROUND 1% EXPECTED
The SNB projects Swiss economic growth of around 1% in 2026, picking up to 1.5% in 2027. The SNB said the main risk to the Swiss outlook was developments in the global economy, in particular the situation in the Middle East, while US trade policy remained a source of uncertainty.
The SNB said it would continue to monitor the situation and adjust its monetary policy if necessary to ensure price stability.
The June monetary policy assessment and accompanying press materials are published on the SNB's website, alongside the conditional inflation forecast and the Governing Board's assessment of financial and monetary conditions.
The SNB also left the discount applied to sight deposits above the threshold unchanged at 0.25 percentage points. According to the forecast, inflation will continue to increase slightly in the coming quarters before declining somewhat in the first half of 2027 as the impact of higher energy prices eases.
The SNB noted that key interest rates had been raised in the euro area, while they had remained unchanged in the US.
Bank news that matters, every weekday.
Follow The Global Banker on LinkedIn