SNB to hold rates at zero through 2026, lean on FX intervention to curb Swiss franc strength 

SNB to Keep Rates at Zero Through 2026, Focus on FX Intervention for Franc

Swiss National Bank's Monetary Policy Outlook and Currency Strategy

By Indradip Ghosh

Policy Rate Decision and Economic Context

BENGALURU, March 16 (Reuters) - The Swiss National Bank will keep its policy rate on hold on March 19 and through 2026, according to nearly all economists polled by Reuters, as the central bank deals with opposing inflation risks.

Compared with many of its peers, Switzerland faces less risk of rising inflation from higher global oil prices, which are up about 50% since the U.S.-Israeli war on Iran began on the last day of February, thanks to a strong Swiss franc.

The currency has gained as much as nearly 2% against the euro since the conflict started, largely on safe-haven demand.

Foreign Exchange Interventions as Primary Tool

With the policy rate already at 0%, the lowest in the world, most respondents in the March 11-16 poll said the SNB should rely on foreign exchange interventions, not a return to negative rates, to counter further franc strength. The SNB recently underscored that its "willingness to intervene in the foreign exchange market has increased".

All but one of 29 forecasters expect the SNB, which meets only four times a year, to keep rates unchanged through 2026, even as futures markets price in a hike by December.

Expert Commentary on SNB Strategy

"The SNB is not willing to introduce negative rates at this stage as the bar remains higher than back in 2015 ... We continue to expect the SNB to remain on hold for the foreseeable future," Nikolay Markov, lead economist at Pictet Asset Management, said.

All except one economist who responded to an extra question, 14 of 15, said the SNB should increase currency interventions to address further strengthening in the franc against the euro.

"For the SNB, sharp Swiss franc appreciation is the most immediate concern ... We continue to view foreign exchange interventions as the SNB’s primary tool to counter such sharp, safe-haven-driven CHF appreciation," Sophie Altermatt, an economist at Julius Baer, said.

Inflation Outlook and Economic Impact

Inflation, steady at 0.1% last month, is forecast to stay comfortably within the SNB's 0%-2% target, averaging 0.4% this year and 0.7% in 2027.

"The pass-through from energy prices to inflation will be modest in Switzerland and upward pressure on the franc will dampen any inflation impact," Andrew Kenningham, chief Europe economist at Capital Economics, said. "So the bar for rate hikes is higher for the SNB than the European Central Bank."

Risks to Export Economy and Growth Projections

The strong franc, however, threatens to deepen pressure on Switzerland’s export‑reliant economy, already hit by higher U.S. tariffs before the conflict.

It is expected to grow 1.1% this year and 1.5% in 2027, on average, poll medians showed, a slight downgrade from December.

Additional Information

(Other stories from the Reuters global economic poll)

(Reporting by Indradip Ghosh; Polling by Reshma Ann Samuel; Editing by Hari Kishan, Ross Finley and Andrew Heavens)