The Swiss National Bank (SNB) is widely expected to hold its policy rate at 0% at its March 19 meeting and keep it unchanged through 2026, according to a Reuters poll conducted March 11-16. The consensus view among forecasters reflects the SNB's balancing act between low domestic inflation and the risk of increased currency strength driven by safe-haven demand.
Poll respondents noted that Switzerland faces comparatively lower inflationary pressure from global oil price increases - crude is up about 50% since the U.S.-Israeli war on Iran began on the last day of February - largely because the strong Swiss franc will mute the pass-through of higher energy costs to domestic prices. The franc has gained nearly 2% against the euro since the conflict started, a move attributed mainly to safe-haven flows.
With the official policy rate already at 0% - the lowest among major central banks - most economists in the poll favoured foreign exchange intervention as the SNB's tool of choice to respond to further franc appreciation rather than a return to negative interest rates. The survey highlighted the SNB's recent statement that its "willingness to intervene in the foreign exchange market has increased." The central bank convenes only four times a year.
Of the 29 forecasters who answered the main poll question, all but one expect the SNB to keep rates unchanged through 2026, despite futures markets that imply a possible rate increase by December. When asked a follow-up question, 14 of 15 economists said the SNB should increase currency interventions if the franc continues to strengthen against the euro.
"The SNB is not willing to introduce negative rates at this stage as the bar remains higher than back in 2015 ... We continue to expect the SNB to remain on hold for the foreseeable future," said Nikolay Markov, lead economist at Pictet Asset Management.
"For the SNB, sharp Swiss franc appreciation is the most immediate concern ... We continue to view foreign exchange interventions as the SNB’s primary tool to counter such sharp, safe-haven-driven CHF appreciation," said Sophie Altermatt, an economist at Julius Baer.
Inflation in Switzerland was steady at 0.1% in the most recent month covered by the poll. Forecasters expect inflation to remain comfortably within the SNB's 0%-2% target range, with median projections of 0.4% for the current year and 0.7% in 2027.
"The pass-through from energy prices to inflation will be modest in Switzerland and upward pressure on the franc will dampen any inflation impact," said Andrew Kenningham, chief Europe economist at Capital Economics. "So the bar for rate hikes is higher for the SNB than the European Central Bank."
Nevertheless, a stronger franc poses risks for Switzerland's export-dependent economy. The currency's appreciation comes at a time when external headwinds have already affected trade conditions, including the impact of higher U.S. tariffs noted in the poll. Median forecasts from the survey project economic growth of 1.1% for this year and 1.5% in 2027, representing a slight downward revision compared with December survey results.
The Reuters poll findings indicate a clear tilt among economists toward using foreign exchange measures to manage currency moves while keeping conventional monetary policy on hold. The consensus view underscores the unique constraints facing the SNB: low domestic inflation, a very low policy rate, and a currency that can gain sharply on safe-haven flows, all of which shape the bank's limited policy toolkit.