SNB Rate Decision: Policy Rate Stays at Zero, Inflation Forecast Edges Up

The Swiss National Bank is keeping the key interest rate at 0.00 percent. Expected, unanimously forecast, on the surface a non-event. In the Reuters survey, all 35 economists surveyed had expected this move, and none expect a rate hike during the current year. What is interesting is not the 'what', but the context: The SNB is slightly raising its inflation forecast, maintaining a high level of readiness to intervene in the foreign exchange market, and now stands as the only major central bank still at zero, whereas the Fed, ECB, and Bank of Japan have gone in the other direction.

The decision in detail

Inflation has risen from 0.1 percent in February to 0.6 percent in May since the last situation assessment, mainly due to higher prices for petroleum products, while other goods and services contributed little to the increase. Accordingly, the SNB is adjusting its conditional inflation forecast. The annual average is now 0.6 percent for 2026, 0.6 percent for 2027, and 0.7 percent for 2028, based on the assumption of a key interest rate of 0 percent for the entire forecast period. In the short term, inflation is expected to increase slightly before retreating somewhat in the first half of 2027, as the impact from energy prices fades over time. The growth outlook remains unchanged: around 1 percent for 2026 and around 1.5 percent for 2027.

The franc remains the real issue

Interest rates are one tool, the foreign exchange market the other, and that’s where the focus lies. The willingness to intervene in the foreign exchange market if necessary remains elevated, to counteract a rapid and excessive appreciation of the franc. This is exactly where the monetary policy of other central banks plays into the SNB’s hands. Last week, the ECB raised its key interest rate for the first time in three years, to 2.25 percent. The Bank of Japan followed with a hike to 1 percent, the highest level in 30 years. The SNB itself notes in its statement that key rates were raised in the eurozone while they remained unchanged in the US. Higher interest rates abroad widen the interest rate differential and take some pressure off the franc. Raiffeisen chief economist Fredy Hasenmaile sums it up: The increased expectations for multiple ECB rate hikes have given the euro tailwind, allowing the SNB to hold back. With the key rate at zero, the SNB now maintains the world’s lowest level among all major currency zones.

Why the SNB looks through the energy shock

At first glance, rising price pressure argues for higher interest rates. But the SNB follows textbook logic. Central banks generally look through a temporary energy price surge because they want to achieve the inflation target in the medium term and higher energy costs slow down the economy. There is also a domestic dampener. Due to the low share of energy expenditures in the Swiss consumer basket and the strong franc, the effects of energy prices are much milder here, meaning inflation rises only moderately. Thus, the SNB is less concerned about inflation running out of control than about weaker global demand and a possible appreciation of the Swiss franc.

What does this mean for mortgage holders?

For those with variable financing, the message is simple: It remains cheap. With the unchanged key rate, the SARON also remains unchanged, so there is little movement in the terms for SARON mortgages. At the long end, it’s not the SNB but the swap curve that counts. Interest rates for long-term mortgages have recently risen slightly, but without the prospect of a strong rate-hike cycle, the upside potential is likely to remain limited in the coming months. The impetus for this doesn’t come from Bern anyway, but from Washington: Yesterday the Fed signaled a hike still this year in its dot plot. For a loan volume of 800,000 francs, every change of 10 basis points alters the annual interest burden by around 800 francs.

When it comes to choosing the term, it remains a question of risk appetite. SARON mortgages are currently and in the longer term generally cheaper than fixed-rate mortgages, but require sufficient risk capacity, while multi-year fixed mortgages make sense primarily if you prefer a fixed calculation basis or expect rising inflation risks. Hasenmaile’s conclusion leaves little room for interpretation: “The SNB sees no need for adjustment in interest rates.”

Conclusion

The SNB is sticking to its course and is not letting the energy shock shake its composure. The zero interest rate is not a thing of the past but rather the normal state for the foreseeable future. Low interest rates continue to offer attractive financing conditions and, together with the tight housing supply, property price growth is likely to even accelerate a bit. For Swiss homeowners, the environment remains comfortable. The risk of higher mortgage interest rates does not lie domestically, but rather in the question of how long the relaxation in the Persian Gulf will last and how serious the Fed is about its policy reversal.

Sources:

• Swiss National Bank: Monetary Policy Assessment of June 18, 2026
• Raiffeisen Switzerland: Impact of the SNB Rate Decision (Fredy Hasenmaile)
• NZZ: The SNB is forging its own path
• SRF: SNB keeps the interest rate at 0 percent
• cash: What economists expect from the SNB meeting