Swiss National Bank Holds Rates at 0% on June 18, Eyes Franc Strength

The Swiss National Bank will keep its key policy rate at 0% on June 18, according to all 35 economists surveyed by Reuters. Swiss inflation sits at 0.6% in May, well below the SNB’s 2% ceiling. The central bank faces competing pressures from energy price shocks and a strengthening franc that keeps inflation subdued. This decision sets Switzerland apart from the European Central Bank, which raised rates last week.

Why Rates Stay Flat

All 35 economists in the June 11-15 Reuters poll predicted the SNB would hold its policy rate at 0% this week. Swiss inflation at 0.6% sits comfortably within the SNB’s 0% to 2% target band, even as the U.S. and euro zone felt inflationary pressure from surging fuel prices. SNB Chairman Martin Schlegel recently said medium-term inflation pressures had “hardly changed,” signalling the central bank would not follow the European Central Bank’s recent rate increase.

The Franc Problem

The Swiss franc has gained nearly 1.2% against the euro this year, acting as a disinflationary force. Many economists said the SNB’s priority is managing franc strength rather than fighting inflation. By signalling an increased readiness to intervene in foreign exchange markets, the SNB has shown concern about the franc’s appreciation amid Middle East turmoil. This currency strength helps keep import prices low but limits export competitiveness.

What Comes Next

All 28 economists who provided forecasts through end-2026 expect rates to remain at 0% for the rest of this year. Only four economists predicted one or two quarter-point rate rises in 2027. Inflation is expected to average 0.6% this year and 0.7% next year, reinforcing expectations for steady policy. Bank of America economist Chiara Angeloni said Switzerland’s low inflation starting point means inflation pressures weigh less on the SNB than on most central banks.

Final Thoughts

The SNB will hold rates at 0% on June 18 as low inflation and franc strength make rate hikes unnecessary. Investors should watch franc movements and SNB intervention signals, which will likely drive Swiss asset prices more than interest rate changes.

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