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Swiss National Bank Holds Key Rate, Tweaks Inflation Forecasts on War Impact on Energy Prices

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Swiss National Bank Holds Key Rate, Tweaks Inflation Forecasts on War Impact on Energy Prices

The Swiss National Bank (SNBN.SW) on Thursday kept its policy rate at 0%, as expected, while slightly nudging its near-term inflation projections upward as the ongoing uncertainty in the Middle East drives energy prices higher.

The SNB said it will apply its 0% policy rate to bank sight deposits up to a specific threshold, maintaining a 0.25-percentage-point discount on deposits exceeding that threshold.

According to the latest data available data, Switzerland's annual inflation came in at 0.6% in May, up from February's 0.1% print. The increase was primarily attributed to climbing oil product prices, with other goods and services making "little" contribution to inflation.

Against this backdrop, the SNB raised its conditional inflation estimates for 2026, 2027 and 2028 to 0.6%, 0.6% and 0.7%, respectively, from the March 2026 forecasts of 0.5%, 0.5% and 0.6%. The Swiss central bank noted that midterm inflationary pressure remains "virtually unchanged" relative to the previous monetary policy review.

Amid expectations of a "more moderate" global economic development tempering Switzerland's near-term growth, the SNB also projects that a "supportive" domestic monetary policy will help bolster an anticipated 1% growth for 2026. Looking ahead, the central bank forecasts 1.5% growth in 2027 as international market conditions are expected to improve.

"The SNB's monetary policy is appropriate to keep inflation within the range consistent with price stability, and it supports economic development. The SNB will continue to monitor the situation and adjust its monetary policy, if necessary, in order to ensure price stability," the Swiss central bank said.

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