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.