Almost all economists in a Reuters news agency survey expect the Swiss National Bank (SNB) to leave its policy rate unchanged on 19th March and maintain that stance through 2026, as it navigates conflicting inflation pressures.
Unlike many other countries, Switzerland is less exposed to rising inflation driven by surging global oil prices, which have climbed roughly 50% since the US-Israeli conflict with Iran began at the end of February, largely due to the strength of the Swiss Franc.
The currency has appreciated by nearly 2% against the Euro since the conflict began, supported mainly by its status as a safe-haven asset.
With the policy rate already at 0%, the lowest globally, most participants in the 11th-16th March Reuters poll said the central bank should use foreign exchange interventions, rather than reintroducing negative rates, to limit further appreciation of the Franc.
The SNB has recently underscored that its “willingness to intervene in the foreign exchange market has increased.”
All but one of the 29 economists surveyed expect the SNB, which holds policy meetings only four times a year, to keep rates unchanged through 2026, despite futures markets indicating a possible rate increase by December.
“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.
All but one of the economists who answered an additional question, 14 out of 15, said the SNB should step up its foreign exchange interventions to counter further strengthening of the Franc against the Euro.
“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,” according to Sophie Altermatt, an economist at Julius Baer.
Inflation, which held steady at 0.1% last month, is expected to remain well within the SNB’s 0%-2% target range, averaging 0.4% this year and rising to 0.7% by 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. So the bar for rate hikes is higher for the SNB than the European Central Bank,” Andrew Kenningham, chief Europe economist at Capital Economics, said.
However, the strong Franc risks adding further strain to Switzerland’s export-dependent economy, which has already been affected by higher US tariffs prior to the conflict.
According to median forecasts in the poll, the economy is expected to grow by 1.1% this year and 1.5% in 2027, both slightly lower than projections made in December.