Finance
SNB expected to avoid negative rates despite inflation downturn
Published by Global Banking & Finance Review®
Posted on December 3, 2025
2 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on December 3, 2025
2 min readLast updated: January 20, 2026
The Swiss National Bank is expected to maintain its 0% interest rate policy until 2026, despite a recent drop in inflation to zero.
By John Revill
ZURICH, Dec 3 (Reuters) - The Swiss National Bank will stick to its 0% interest policy next week and well into 2026 rather than opting for negative rates, economists said on Wednesday, despite inflation slipping below expectations to the bottom end of the SNB's target range.
Switzerland's annual inflation rate unexpectedly slowed by a 10th of a percentage point in November to zero, slightly undershooting expectations, official data showed.
The consensus forecast of a Reuters poll of analysts was that inflation would remain unchanged at 0.1% last month.
The 0% reading was at the bottom end of the SNB's price stability target for inflation between 0% and 2%, and the lowest figure since May.
DATA IS LAST INFLATION READING BEFORE RATES DECISION
The central bank declined to comment on the figures, which were the last inflation data before it announces its next interest rate decision on December 11.
Still, despite the downturn economists reckon the SNB will keep its benchmark interest rate unchanged at 0% and well into 2026.
"There is no need for policy changes," said Karsten Junius, an economist at J.Safra Sarasin, who also expects no change in 2026.
Rudolf Minsch, chief economist at economiesuisse, also expects the central bank to keep interest rates at zero next week and throughout 2026, while Swiss inflation would increase to around 0.4% next year.
"Negative interest rates also have undesirable effects, and are only used when there is an urgent necessity, which we don’t see," he said.
SNB HAS HIGH THRESHOLD TO CUT RATES
Likewise, UBS economist Alessandro Bee said he expected the SNB to keep rates at 0% into 2026, when he expected a slight acceleration in Swiss inflation due to higher wages next year.
Market expectations are presently that the bank will leave the benchmark rate unchanged next week.
SNB officials have also previously said they expect inflation to rise in future, while they also said they would tolerate inflation falling below 0% temporarily.
(Writing by John Revill and Dave Graham, Editing by Miranda Murray, Aidan Lewis)
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount. They are influenced by the central bank's monetary policy and economic conditions.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI).
A central bank is a national institution that manages a country's currency, money supply, and interest rates. It oversees the banking system and implements monetary policy to stabilize the economy.
A benchmark interest rate is a standard rate that serves as a reference point for other interest rates. It is often set by a central bank and influences borrowing costs across the economy.
Explore more articles in the Finance category
