Switzerland: Swiss National Bank holds rates in December
Latest bank decision: At its meeting on 11 December, the Swiss National Bank (SNB) held the policy rate at 0.00%.
SNB in wait-and-see mode: The Bank’s decision to hold was likely motivated by the desire to assess the impact of the 175 basis points of rate cuts implemented since early last year. The European Central Bank’s decision to keep rates unchanged since September was likely also a factor; had the ECB continued to cut rates, this could have pressured the SNB to keep cutting to avoid the franc appreciating.
Bank likely to remain on hold: Most panelists predict rates will stay unchanged until end-2026, with a couple forecasting a 25 basis point cut to prop up price pressures, and one anticipating a hike.
Panelist insight: ING’s Charlotte de Montpellier said:
“Overall, we believe the SNB will keep rates at 0% in the coming months. Even though this is not our base case, the probability that it will be forced to cut rates again is probably higher than markets currently expect. Interestingly, the SNB continues to indicate it is “ready to be active in the foreign exchange market if needed,” but seems very reluctant to use this tool at present. At the press conference, SNB officials stressed that the interest rate is their primary monetary policy tool. Their view on this has evolved significantly in recent years, as FX interventions were widely used during the negative rate period before the Covid pandemic.”