SNB Remains Extremely Dovish: Zero Rates Locked In; franc interventions still on the table

Policy Decision

At today's December 2025 monetary policy evaluation, the Swiss National Bank left its policy rate unchanged at 0%, therefore sustaining one of the most accommodative positions among top central banks. Sight deposits are compensated at 0% up to a certain threshold, with a small 25-basis-point discount applied to values above it. Once more stressing its willingness to intervene as needed in the foreign exchange market, the SNB indicated continued worry about possibly excessive Swiss franc appreciation.

Inflation is still practically non-existent.

Driven by lower hotel, rent, and clothing prices, Swiss inflation has dropped from 0.2% in August to exactly 0.0% in November. Assuming steady 0% rates, the SNB's new conditional inflation prediction projects average CPI at merely 0.2% in 2025, 0.3% in 2026, and 0.6% in 2027—all comfortably within but at the very lower end of the 0–2% price-stability range.

Outlook and Market Forecast

While preserving price stability and supporting economic activity, the Bank judges medium-term inflationary pressure to be mostly unchanged and believes the current ultra-easy policy to be suitable. Global risks have little eased but are still great. Markets and analysts nearly all anticipate the SNB to maintain 0% rates throughout 2026, with just a rather low likelihood priced in for a return to negative area.