publication
2025-09-25 09:30
The Swiss National Bank decided to keep the interest rate unchanged, at 0.00%. This probably means the end of the monetary policy loosening cycle in Switzerland.
A rate of monetary policy of the Swiss National Bank remained unchanged at 0.00%. Such a decision was in line with the market consensus, which did not assume a decrease in interest rates in Switzerland below zero. In addition, there is still a 25-point interest reduction for bank deposits above a specific level.
To this round level, the SNB foot was lowered in June. It was probably the last reduction in the feet at Helvetts, carried out as a cycle of reductions started in March 2024. Since then, until today, SNB has lowered his feet at every decision -making meeting: in September and June SNB, when it did not surprise the market and made a reduction of 25 PB.
In December last year, SNB strongly surprised market participants, reducing the cost of credit by 50 pb. Instead of expected 25 PB. MARCOW's decision was also not a surprise when the SNB foot was cut by another 25 PB.
– Inflation pressure remained virtually unchanged compared to the previous quarter. Monetary policy helps to maintain inflation inside the compartment identified with price stability and supporting economic development. SNB will carefully monitor the situation and adapt the monetary policy if necessary to ensure price stability – we read in the September SNB announcement.
SNB traditionally already reserves the right to intervene in the currency market “if necessary”.
Up, from under the line and back to zero
The first cycle of interest rate increases in over a decade began in June 2022. At that time, the Helvets unexpectedly raised the cost of money at the Central Bank by 50 PB: from -0.75 percent. to -0.25 percent In autumn, as expected, they added another 75 pb, returning to positive interest rates. In December 2022, they added another “fifty”, and in March 2023, the feet were raised only after 25 PB. However, a year ago, SNB surprised everyone, giving up the expected increase of 25 PB.
From March 2024, in Switzerland there was a series of interest rate reductions, which at that time were reduced by 175 pb. Such loosening of monetary policy in Switzerland would not have been possible if inflation could not be permanently brought to the goal. In February, CPI inflation in Switzerland was only 0.3% and was the lowest in nearly 4 years. Since the beginning of 2025, inflation in this Alpine country has remained near zero.
SNB set itself the task of maintaining an annual increase in prices not higher than 2% (i.e. it is 0-2%). Earlier, for 16 months, Swiss inflation exceeded 2%, in gusts reaching 3.5% in August 2022. It was then the highest reading for nearly 30 years. But for 27 months, CPI inflation in Switzerland is located in the central range desired by the bank.
The SNB projection assumes that this year the average annual CPI inflation will be 0.2% to increase to 0.5% in 2026 and 0.7% in 2027. These readings would still be clearly lower than in the USA or the euro area, but also as part of the Swiss inflation target.
