- The SNB held its key rate at 0%, with Swiss inflation at 0.8% in August, inside its 0%-2% objective. That keeps Switzerland the outlier as the ECB, Fed and Bank of Japan raise rates, with Canada and the U.K. expected to follow later in 2026.
- Traders price a December SNB hike at close to 50-50 and more than a 90% probability of a hike by early 2027. LSEG data shows the key rate priced at no less than 0.75% by September 2027.
- Franc depreciation of more than 2% against the euro and more than 1% against the dollar since the June SNB meeting raises the risk that inflation accelerates faster than expected, UBS economists wrote, pulling their expected first hike forward from June 2027.
- Switzerland's inflation basket carries energy at about 3.5%, versus about 7% in the euro zone, with hydropower and nuclear generation limiting exposure to regional energy shocks. The franc's safe-haven status adds a deflationary impulse by making imports cheaper.
- The franc rose more than 12% against the dollar in 2025 as investors sought protection from market volatility; the greenback has since recovered about 4% against the franc in 2026, softening the deflationary pressure the SNB relies on.
Quotes
“Swiss franc depreciation of more than 2% against the euro and more than 1% against the US dollar since the last SNB meeting in June could increase concerns that inflation will accelerate more than previously anticipated”
“Although we believe inflation is quite unlikely to exceed 2% over the next 12-18 months, the SNB has a history of surprising markets.”
“Unlike the U.S., the U.K. and the euro zone, Switzerland imports credibility as much as it imports goods”
“When global energy and commodity prices spike the natural appreciation of the franc absorbs the shock, thereby rendering imported goods significantly cheaper for the Swiss consumer.”