Published by Global Banking & Finance Review®
Posted on September 25, 2025
4 min readLast updated: January 21, 2026
Add as preferred source on GoogleThe Swiss National Bank held its interest rate at zero, citing US tariffs' impact on the economy. Inflation is expected to rise, and growth is forecasted under 1% for 2026.
By John Revill
ZURICH (Reuters) -The Swiss National Bank held its key interest rate at zero on Thursday, the lowest among major central banks, as it warned that U.S. President Donald Trump's tariffs had dimmed the outlook for the Swiss economy going into 2026.
The SNB's decision to keep its policy rate at 0% had been widely expected by markets and a Reuters poll, and was helped by a small uptick in inflation in recent months.
It was the first hold in seven meetings by the SNB, after it started reducing borrowing costs in March 2024.
The announcement was the SNB's first rate decision since Trump slapped a 39% tariff on Swiss goods exports to the United States in August.
After the decision, the franc initially strengthened, but later pared those modest gains to trade fairly steadily on the day against the euro, which was last up 0.1% at 0.9345 francs, while the dollar was up 0.13% at 0.796 francs.
ECONOMIC OUTLOOK HURT BY U.S. TARIFFS
The SNB said companies in the machinery and watchmaking sectors are particularly affected by tariffs but that the impact on other industries - notably in services - has been limited.
"The economic outlook for Switzerland has deteriorated due to significantly higher U.S. tariffs. The tariffs are likely to dampen exports and investment especially," it said.
Due to the tariffs and the high level of uncertainty, the SNB now expects growth of just under 1% for 2026. In this environment, unemployment is likely to continue rising, it said. It had previously seen growth of between 1% and 1.5% next year.
The Swiss government is currently trying to negotiate a lower tariff rate with the Trump administration.
The SNB's decision comes a week after the U.S. Federal Reserve cut its rates to head off the risk of rising unemployment and indicated more cuts could follow.
The European Central Bank meanwhile left its interest rate unchanged in September, pausing its recent round of rate cuts, although discussions about rate cuts were not over.
HOLD WAS EXPECTED BUT NEGATIVE RATES STILL POSSIBLE
The SNB's decision to keep rates on hold did not surprise analysts, who also highlighted the Swiss franc's relative stability versus the euro as a reason to stay on hold.
"The main downside risk to the economy and inflation stems from U.S. trade policy and its impact on global growth to which a small open economy like Switzerland is very sensitive," said GianLuigi Mandruzzato, an economist at EFG Bank.
Mandruzzato said the overall impact of the tariffs appeared to be "manageable" and several analysts predicted that the SNB would now leave its benchmark rate at zero with the central bank anticipating a gradual increase in inflationary pressure.
SNB Chairman Martin Schlegel repeated his position that there are high hurdles to reintroducing a negative interest rate, a policy which sparked concerns from savers and pension funds when used from December 2014 to September 2022.
But the central bank is prepared to cut rates again if it proves necessary, Schlegel told a press conference.
Swiss inflation has returned to the SNB's 0-2% target range in the last three months after turning negative in May. The SNB on Thursday maintained its view that inflation would tick up to 0.5% in 2026 and 0.7% in 2027 after reaching 0.2% this year.
Adrian Prettejohn, Europe economist at Capital Economics, forecast the SNB will lower rates again.
"We do not think that this is the end of the rate cutting cycle," he said. "We think that inflation is likely to average around zero next year, prompting the SNB to cut rates in the coming quarters to reduce the risk of deflation."
(Reporting by John RevillAdditional reporting by Ariane Luthi, Rachel More, Miranda Murray, Amanda CooperEditing by Dave Graham, Alexandra Hudson)
The Swiss National Bank (SNB) is the central bank of Switzerland responsible for monetary policy, including setting interest rates and ensuring price stability.
Tariffs are taxes imposed on imported goods, which can affect trade balances and domestic economies by making foreign products more expensive.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Monetary policy involves the management of money supply and interest rates by central banks to control inflation and stabilize the economy.
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