SNB keeps interest rate at zero as oil prices lift inflation outlook

The Swiss National Bank held its policy rate at 0% on Thursday, September 24, 2026, keeping borrowing conditions unchanged as oil prices pushed Swiss inflation higher. The decision had been widely expected, yet it carries weight beyond the headline figure. Switzerland is now maintaining its ultra-low rate while the US Federal Reserve and European Central Bank have recently tightened policy, widening the gap between the Swiss economy and its main trading partners.

Annual inflation reached 0.8% in August, compared with 0.4% in July, according to the SNB. The increase remains modest by European standards and sits comfortably inside the central bank’s 0% to 2% price stability range. The immediate pressure came from fuel and other oil products, rather than a broad surge across the Swiss economy.

SNB Chairman Martin Schlegel said the bank judged its policy “appropriate to keep inflation within the range consistent with price stability and supports economic development”. The central bank also retained its ability to intervene in currency markets, a tool it has used to manage the franc’s strength and protect the competitiveness of Swiss exporters.

For households, the decision means no immediate change to the cost of mortgages, savings or business credit. For markets, the updated forecasts signal that the SNB is watching energy prices closely.

The SNB lifted its inflation forecast for all three years through 2028, while stressing that medium-term pressure has increased only slightly. The bank now expects prices to rise by 0.7% in 2026, compared with its previous estimate of 0.6%. It sees inflation at 0.8% in 2027, up from 0.6%, and at 0.8% in 2028, up from 0.7%.

The revisions reflect higher oil prices and their effect on energy products. They do not yet point to a broad inflation problem. Switzerland’s price growth remains low, and the SNB said the recent acceleration was mainly linked to oil rather than sustained domestic demand. That distinction gives policymakers room to leave rates unchanged while they assess whether the energy shock spreads into wages, services and business costs.

The forecast still places inflation near the lower half of the SNB’s definition of price stability. It also highlights the limits of monetary policy when the initial shock comes from global energy markets. Raising Swiss rates would not directly lower the international price of oil, though it could strengthen the franc and reduce the cost of imported goods.

The central bank will therefore track the second-round effects. A temporary fuel increase would require a different response from persistent price pressure embedded across the economy.

The Swiss economy is forecast to grow by 1.5% to 2% this year, a sharp upgrade from the SNB’s earlier estimate of around 1%. The change follows a strong second quarter, when GDP rose to 1.5%, powered mainly by exports from the pharmaceutical sector.

That performance helped the SNB justify keeping credit conditions loose. Switzerland’s pharmaceutical companies sell heavily abroad, so their results depend on global demand, exchange rates and access to international markets. A lower interest rate can support domestic activity, while a weaker franc can make Swiss exports more competitive when translated into foreign currencies.

The SNB said the franc had depreciated by around 3% since June. Schlegel linked the move to wider interest rate differentials between Switzerland and major currency areas. Investors can earn more by holding currencies where central banks offer higher rates, reducing some of the demand for the franc as a safe haven.

The currency remains central to Swiss monetary policy. The franc attracts investors during geopolitical tensions and economic uncertainty, alongside assets such as gold, German government bonds and the Japanese yen. A sharp appreciation would squeeze exporters and make imported Swiss goods more expensive abroad. The recent weakening gives the SNB more breathing room, although it also raises the cost of energy and other imports.

The franc’s 3% decline since June has reduced upward pressure on the currency, but the SNB has kept intervention on the table. The bank’s statement said it was prepared to act in the foreign exchange market if necessary to ensure appropriate monetary conditions.

That option gives policymakers a way to respond if the franc rises rapidly and threatens exporters. It also signals that the SNB is not relying on interest rates alone. Currency purchases or sales can influence the franc’s value, although intervention carries risks and depends on market conditions. The central bank must weigh export competitiveness against the inflationary effect of a weaker currency, especially when energy imports are already becoming more expensive.

Schlegel said the bank would continue to monitor developments and adjust monetary policy if required. He identified energy prices, inflation and the wider economic outlook as key uncertainties. Trade policy and exchange rate movements also remain risks, according to the SNB.

Switzerland’s position differs from that of larger economies because its currency often strengthens during periods of stress. Investors seeking safety can push up the franc even when the domestic economy does not need tighter conditions. That safe-haven role helps explain why the SNB has historically used both interest rates and foreign exchange operations to manage monetary conditions.

A rate increase at a coming SNB meeting has become more plausible, according to EFG International analyst GianLuigi Madruzzato. He said the continuation of the zero-rate policy was “less of a certainty than it was just a short while ago”, pointing to the combination of firmer inflation and a weaker franc.

The next decisions will depend on whether oil prices continue to rise and whether the latest increase in inflation reaches services, wages and domestic demand. If the energy effect fades, the SNB can preserve its current policy and support growth. If price pressure broadens, policymakers may face calls to raise rates despite the risk of strengthening the franc and weighing on exporters.

The bank’s forecasts provide some room for patience. Inflation remains below 1% in its projections through 2028, while GDP growth has received an upgrade. Yet the outlook is exposed to global events that Switzerland cannot control, including energy market disruptions, trade policy changes and shifts in investor demand for safe-haven assets.

For Swiss households and companies, the September decision delivers stability for now. Mortgage and financing costs will not rise immediately, but markets will watch the December and March meetings for signs that the SNB’s long period at zero is approaching a turning point.