ECB raises key interest rates again: What the decision on September 10 means for Switzerland

The European Central Bank is raising key interest rates for the second time in this cycle. The deposit rate is rising to 2.50 percent, and the new projections show: inflation remains above target longer than previously assumed. Why the CHF swap curve rose by over 10 basis points within two days around the decision and what mortgage borrowers should watch for in the next eight days.

What the ECB announced in July, it delivered on Thursday. At its meeting in Berlin, the ECB Governing Council decided to raise the three key interest rates by 25 basis points each. The deposit rate will rise to 2.50 percent effective September 16, the main refinancing rate to 2.65, and the marginal lending rate to 2.90 percent. The reasoning remains the same as in June: The war in the Middle East is causing persistent inflationary pressure, and inflation, according to the ECB, is likely to remain significantly above the 2 percent target for a longer period.

The announced step has been taken

When we reported on the rate pause in July, the direction was already clear: postponed, not canceled. Since then, the data has given the central bank little choice. Inflation in the euro area climbed from 2.9 to 3.3 percent in August, driven by energy prices that rose 14.3 percent year-on-year. At least: Core inflation excluding energy and food fell slightly to 2.4 percent in August. So far, there is little evidence of broad second-round effects, which President Christine Lagarde warned of in July. This is likely to shape the debate about the next steps.

New projections: higher inflation, but also more growth

With the September meeting, the ECB presented new projections as scheduled. In the baseline scenario, its experts anticipate for 2026 an average overall inflation of 3.0 percent, for 2027 of 2.5, and for 2028 of 2.1 percent. Compared to June, the values for 2027 and 2028 were revised upwards. Inflation will thus return to target later than previously thought. The second half of the projections is particularly noteworthy: growth was raised to 0.9 percent for 2026 and 1.4 percent for 2027, as the eurozone economy is proving more resilient than expected. A central bank predicting higher inflation and more robust growth at the same time has little reason to take its foot off the brake.

Whether it will need to brake even harder remains an open question. At 2.50 percent, the deposit rate is, in the opinion of many economists, at the upper end of the neutral range. Any further step would mean a deliberate move into restrictive territory to combat a supply shock over which monetary policy has no direct influence. Nevertheless, the markets are pricing in another hike by December or early 2027. The ECB itself is keeping all options open and says it will decide on a meeting-to-meeting basis, depending on the data.

Switzerland: Ten basis points in two days

The CHF swap curve did not wait for the decision; it accompanied it. On Tuesday, the 10-year CHF swap was still quoted at just under 0.69 percent. On Wednesday, the first day of the ECB meeting, it jumped by a good 6 basis points to around 0.74 percent, and on the decision day itself, the next surge followed, to just under 0.80 percent: a good 10 basis points within two days, thus surpassing the July high. For context: at the end of June, the rate was still at 0.51 percent, climbing to 0.77 percent by the ECB decision of July 23, and dropping to around 0.62 percent over the summer. The recent surge was driven by the whole central bank week: from the surprisingly strong US jobs report and the resulting Fed expectations to the ECB hike and upward revised inflation forecasts. The rate hike itself had already long been priced in on the futures markets, but the combination of restrictive signals on both sides of the Atlantic continues to push capital market interest rates higher.

The constellation remains comfortable for the franc. The difference between the ECB deposit rate and the SNB key rate is now 2.5 percentage points. The larger this gap, the lower the upward pressure on the franc. Today’s decision thus gives the Swiss National Bank more leeway ahead of its monetary policy assessment, rather than putting it under pressure to act.

What does this mean for mortgage borrowers?

Nothing changes for SARON mortgages. The key rate of the Swiss National Bank remains decisive, and that is at 0 percent, with SARON still quoted slightly in negative territory. Anyone holding a money market mortgage pays not a single franc more after today’s decision.

When it comes to fixed-rate mortgages, the past quarter teaches us one thing above all: the fluctuations are considerable. Between the low at the end of June and today’s level there are almost 30 basis points. For a loan amount of 800,000 francs, that corresponds to a difference of over 2,200 francs in annual interest charges for a new ten-year fixed-rate mortgage. And anyone who locked in during the weak phase at the end of August is paying almost 20 basis points less compared to today. Such windows open and close within days, and when the next one comes is determined less by central banks than by energy prices and US capital market interest rates, which set the pace for the CHF swap curve. Those ready to close a deal, with offers in hand and a clarified strategy, can take advantage of such phases. It is all the more important to compare multiple providers, as the margin between swap rate and offered interest differs significantly from one institution to another.

Outlook: Eight days, three central banks

September remains the busiest central bank month of the year. On September 15 and 16, the US Federal Reserve meets. Its target range is 3.50 to 3.75 percent, and after the surprisingly strong jobs report for August, a rate hike is considered a realistic scenario. On September 18, the Swiss National Bank follows with its policy assessment. Only after that will the picture for the fourth quarter be complete. Anyone planning a refinancing or new financing has good reason to wait out these eight days—and equally good reason to obtain offers in the meantime. Because one thing has become clear in the last 48 hours: During central bank weeks, conditions can shift noticeably within days.

Sources

• ECB: Monetary Policy Decisions of September 10, 2026
• ZDFheute: ECB raises key rate to 2.5 percent
• NZZ: Renewed escalation of the Gulf war puts ECB on higher alert
• Dow Jones via finanzen.at: ECB staff projections show higher inflation in 2027 and 2028
• investrends.ch: ECB before second rate hike in a row
• LBBW Research: Fed interest rate decision and forecast
• hypothek.ch: Current swap rates