SNB to hold rates at zero on September 25 and throughout 2026, economists say: Reuters poll

A Reuters poll reveals a strong consensus among economists for the Swiss National Bank (SNB) to hold its policy rate at 0.00% on September 25, marking its first pause since December 2023, with expectations for rates to remain at this level through 2026. This decision is primarily driven by inflation consistently staying within the SNB's 0-2% target, currently at 0.2%, and the Swiss franc maintaining a steady exchange rate against the euro, mitigating pressure for further easing despite the SNB already having the lowest rates among major central banks. SNB Chairman Martin Schlegel's previous comments on the "undesirable side effects" of negative rates further reinforce the high bar for any future cuts.

Analysis

A strong consensus among economists, based on a Reuters poll, indicates the Swiss National Bank (SNB) will hold its policy rate at 0.00% on September 25 and maintain this level through 2026. This stability is underpinned by inflation remaining well within the central bank's 0%-2% target range, last recorded at 0.2%, and the Swiss franc's steady performance against the euro, which has gained only 0.4% year-to-date. The likelihood of a return to negative rates is low, reinforced by SNB Chairman Martin Schlegel's stated concerns about their "undesirable side effects." The European Central Bank's hawkish pause on rate cuts further alleviates appreciation pressure on the franc, giving the SNB room to hold. While the domestic economy is described as resilient, it is also facing headwinds as an export-dependent nation, with annual GDP growth slowing to 1.2% last quarter amid impacts from U.S. tariffs. In the event of significant franc appreciation, the SNB is expected to prioritize foreign currency market interventions over rate adjustments, a policy option it still holds in reserve.

Key Decisions for Investors

• Investors should anticipate a stable Swiss monetary policy environment, as the consensus strongly points to the SNB holding its policy rate at 0.00% for the foreseeable future, limiting the potential for rate-driven currency appreciation.
• For positions tied to the Swiss franc, expect limited upside as the ECB's hawkish stance and the SNB's preference for FX intervention over rate cuts are likely to cap significant gains.
• Holders of Swiss equities should weigh the benefit of a predictable interest rate environment against the macroeconomic headwinds of slowing GDP growth and the impact of U.S. tariffs on the export-oriented economy.
• Fixed income investors should recognize that Swiss short-term debt will likely continue to offer near-zero yields, making it a tool for capital preservation rather than income generation.