Swiss Franc: Policy rate seen on hold – ING

ING economist Charlotte de Montpellier expects the Swiss National Bank to keep its policy rate at 0% next Thursday and over the coming quarters, as Swiss growth has surprised on the upside but inflation remains subdued. She highlights that stronger GDP and a slightly weaker Swiss Franc do not yet pose an inflation threat, allowing continued accommodative policy.

SNB stance supports strong Franc

"We expect the Swiss National Bank to keep its policy rate at 0% next Thursday and to remain on hold over the coming quarters."

"Even so, the economy is clearly performing better than anticipated a few months ago. We have raised our forecast for GDP growth to an average of 1.9% in 2026, while we expect growth of 1.6% in 2027. The stronger outlook reflects the solid performance recorded in the first half of the year, somewhat more favourable international demand and the recent slight weakening of the Swiss franc."

"Overall, there is little to suggest that the SNB needs to change its policy rate. We expect it to leave the rate unchanged at 0% on Thursday and to remain on hold over the coming quarters, particularly if, as we expect, global energy prices eventually decline."

"The SNB is therefore likely to continue to stand out from other central banks by maintaining a much more accommodative monetary policy stance. This divergence reflects Switzerland’s domestic inflation environment, which remains unusually benign thanks in large part to a currency that is still strong."

"All in all, we expect the SNB to leave its policy rate at 0% and to retain its targeted approach to foreign exchange intervention. As long as domestic inflation remains subdued and the franc stays strong, albeit without appreciating excessively, the SNB can continue to run a significantly more accommodative monetary policy stance than most other central banks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)