The Swiss National Bank announced on March 19 that it will keep its policy rate at 0% following its latest monetary policy assessment. The bank reiterated the structure for remunerating banks' sight deposits: deposits up to a defined threshold will receive the SNB policy rate, while balances above that threshold remain subject to a discount of 0.25 percentage points.
In light of the conflict in the Middle East, the SNB said its readiness to intervene in foreign exchange markets has increased. The bank framed such interventions as measures to counteract a rapid and excessive appreciation of the Swiss franc, an outcome it said could jeopardise price stability in Switzerland.
The SNB reported that its conditional inflation projection for the coming quarters is higher than in December, driven in particular by rising energy prices. Short-term inflation has edged up since the previous assessment - from 0.0% in November to 0.1% in February - with higher goods inflation contributing to the increase. The bank's statement noted that, because of the escalation in the Middle East, a further rise in energy prices is likely to push inflation higher in the near term.
Looking beyond the immediate horizon, the SNB judged medium-term inflationary pressure to be virtually unchanged since its last evaluation. The bank said that, despite a stronger Swiss franc, the conditional forecast remains within the range consistent with price stability over the full forecast horizon. The forecast, which assumes an unchanged SNB policy rate of 0% throughout the projection period, puts average annual inflation at 0.5% for 2026, 0.5% for 2027 and 0.6% for 2028.
The SNB described global economic growth as solid in the fourth quarter. It noted a divergence in inflation dynamics across major currency areas - remaining elevated in the United States while hovering near the central bank target in the euro area - and observed that key interest rates were left unchanged in both regions. The bank said the outbreak of hostilities in the Middle East has materially increased uncertainty around the economic outlook.
In the SNB's baseline scenario, a rise in energy prices would lift inflation in many countries in the short term and is likely to cause a temporary slowdown in global growth. The bank highlighted several downside risks to the global outlook: energy prices could climb more sharply than assumed in the baseline, which would notably raise inflation and substantially restrict economic activity; potential supply chain disruptions and a rise in uncertainty might also weigh on growth. The SNB additionally flagged continued uncertainty on the trade policy front as a contributing risk to the global picture.
Domestically, the SNB reported that Swiss gross domestic product returned to growth in the fourth quarter after a contraction in the preceding quarter. Unemployment in February remained at the same level recorded at the time of the previous monetary policy assessment.
The bank described the near-term economic outlook for Switzerland as uncertain. It expects growth to be relatively subdued in the short term followed by a moderate upturn in the medium term, projecting around 1% growth for 2026 as a whole and roughly 1.5% for 2027. The SNB identified developments in the global economy - and in particular the course of events in the Middle East - as the principal risk to the Swiss outlook.
The SNB said monetary policy continues to support price stability and economic activity and that it will monitor developments closely, ready to adjust policy if necessary to ensure price stability over the medium term.
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