Swiss National Bank Holds Rate At Zero, Scales Back FX Threat As Franc Softens

What the SNB decided and why it matters

Switzerland's central bank kept its benchmark rate at 0% - still the world's lowest - and dialed back the tough talk about countering franc strength. Schlegel told reporters, "We are also willing to be active in the foreign-exchange market as necessary to ensure appropriate monetary conditions," reverting to wording used before the latest Middle East conflict. Officials removed earlier language about an "increased willingness" to fight franc gains now that haven flows have ebbed. A softer currency makes imports costlier, which can feed into inflation.

Schlegel said the bank flagged extra readiness to intervene when appreciation pressure built because a rapid franc surge could threaten price stability. He added that the franc has eased a little, and the SNB remains prepared to act in the market if needed.

Inflation, growth and the new forecasts

The SNB pushed its inflation path higher, projecting 0.7% for 2026 and 0.8% for each of the two years after that. "Medium-term inflationary pressure has increased only slightly," Schlegel said. August inflation came in at 0.8%.

Price pressures are rising mostly due to external forces, while domestic drivers are mixed. Electricity bills are expected to decline. Growth is running hotter than expected, with output excluding sporting events jumping 1.5% in the second quarter.

The central bank now expects GDP to grow in a range of 1.5% to 2% this year, with growth around 1.5% in 2027. The global outlook is the key swing factor. "The situation in the Middle East could deteriorate further and curb global economic activity more strongly," said policymaker Petra Tschudin. "The trade policy environment and exchange rate developments also continue to be sources of uncertainty."

A steady, patient approach helps protect your savings through changing currency environments. Join Briefs Finance CEO Jaspreet Singh on September 29th for a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, where he shows how we're spotting investment opportunities as the dollar falls. Save your spot.

Franc moves, intervention tools and the global backdrop

The currency slipped after the announcement, falling to 0.9433 per euro at one stage - a decline of 0.4% - before recovering slightly to roughly 0.9420. The franc is now below its pre-conflict levels, including its softest reading against the euro in 17 months and the lowest against the dollar since last June.

Early in the conflict, the bank signaled a stronger readiness to step in to head off franc appreciation. With the currency back around pre-war marks, officials no longer see the need to keep that heightened warning, though they still stand ready to act. The SNB publishes intervention data with a three-month lag, with second-quarter figures due at the end of September.

One option on the table would be to offload foreign-currency holdings to bolster the franc and curb imported inflation, a step that would also reduce the SNB's sizable balance sheet. Schlegel did not explicitly rule that out, and said there is no target level for the bank's assets.

Switzerland's stance contrasts with peers. The Federal Reserve and the European Central Bank have been tightening to contain the impact of higher energy costs, and Norway raised rates on Thursday. Bloomberg Economics' Jean Dalbard expects the SNB to hold at 0% until late 2027.

"This lays the groundwork for the SNB to eventually join the hiking cycle, although the timing is fluid and contingent also on the actions by the Fed and especially the ECB," said Luigi Buttiglione, who serves as CEO of LB Macro and formerly held a post at the Bank of Italy. He sees a possible hike as soon as the December quarterly meeting if peers continue tightening aggressively, otherwise the first quarter looks more likely. Schlegel declined to give guidance on the path ahead, and most analysts don't expect a rate increase before 2028.

What this means for your money

A weaker franc can make imports pricier, and the SNB is trying to balance that against a world that can change fast. For now, Switzerland is sticking with near-free money while keeping its currency toolkit close at hand. If you earn, spend or invest across currencies, keep an eye on the franc and those inflation updates - they are likely to set the tone for what comes next.

Thoughtful guidance and regular strategy reviews can keep your money on firmer ground. Our CEO Jaspreet Singh is hosting a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, on September 29th. Sign up free to join him live.