Swiss National Bank Pauses Policy Easing

(RTTNews) - The Swiss National Bank left its policy rate unchanged after easing for six straight meetings as higher US trade tariffs dampened the economic outlook amid weak inflation. The SNB retained its policy rate unchanged at zero percent, as widely expected.

Banks' sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold. The discount for sight deposits above this threshold still stands at 0.25 percentage points, the bank said in a statement.

The central bank had reduced the key rate by 175 basis points since March 2024. The bank exited its negative rate in 2022 after holding it for over seven years.

ING economists said the SNB would prefer to avoid returning to negative rates. "However, the door to further easing remains ajar," they said.

A sharper-than-expected deterioration in the economic outlook could quickly bring rate cuts back into the conversation, economists noted.

This was the first policy-setting meeting of the SNB after the US President Donald Trump imposed 39 percent tariff on Swiss goods.

The bank observed that the economic outlook for Switzerland deteriorated due to significantly higher US tariffs. The bank continues to expect GDP growth of 1 percent to 1.5 percent for 2025.

Due to tariffs and the high level of uncertainty, the SNB expects growth of just under 1 percent for 2026.

Although inflation rose slightly since the last meeting, the bank retained its inflation outlook. Inflation is projected at 0.2 percent this year, 0.5 percent in 2026 and 0.7 percent in 2027.

The SNB reiterated that it remains willing to be active in the foreign exchange market as necessary.