Swiss National Bank holds rates at 0% as traders bet on 2027 hikes

The Swiss National Bank held its policy rate at 0% on Thursday (September 24), holding out against a global tightening cycle already underway at the Fed, ECB and Bank of Japan. Traders in interest rate markets now assign better than 90% odds that the SNB will start raising rates by early 2027, betting Switzerland’s exception cannot last.

• Swiss annual inflation rose to 0.8% in August, still well below the 2% targets used by the Fed, ECB and Bank of England.
• LSEG data show traders pricing close to 50-50 odds of a December hike and better than 90% odds of one by early 2027.
• Traders are betting the SNB’s key rate reaches at least 0.75% by next September, according to LSEG data.

• 0% current SNB policy rate versus rising rates at Fed, ECB, BOJ
• 0.8% August Swiss inflation versus 2% Fed and ECB targets
• 90%+ odds SNB hikes by early 2027, per LSEG trader pricing
• 12% franc’s 2025 gain against the dollar before a 4% pullback this year

Switzerland’s central bank left its benchmark rate unchanged at 0% on Thursday, September 24, breaking with a tightening pattern now underway at its largest trading partners. The European Central Bank, the U.S. Federal Reserve and the Bank of Japan have all begun raising rates this year to fight inflation, and the central banks of Canada and the U.K. are expected to join them before year end, according to CNBC. The SNB’s holdout position is not expected to last: LSEG pricing cited by CNBC puts the odds of a hike versus a hold at roughly 50-50 in December, rising to better than 90% by early 2027.

Swiss inflation at 0.8% still trails Fed, ECB targets

Switzerland’s annual inflation rate climbed to 0.8% in August, driven by higher gasoline, diesel and heating oil costs. That is still far below the roughly 2% inflation now facing the U.S., U.K. and euro zone economies, whose central banks target 2% against an SNB range of 0% to 2%.

Antonio Fatás, a professor of economics at INSEAD business school and an external consultant for the IMF, told CNBC that Switzerland’s long run of low inflation keeps expectations anchored. “When a shock hits, a central bank that can rely on low inflation expectations will have an easier time managing inflation and keeping it low, that’s the case [for the likes of] Switzerland or Japan,” he said.

Fatás cautioned that the picture looks different once real rates, meaning nominal rates adjusted for inflation, are compared. “[An] interest rate at 0% and inflation around 0.8% means a real interest rate of -0.8%,” he told CNBC. “In the Euro area, an interest rate of 2.5% and inflation of around 3.2% means a real interest rate of -0.7%, so very similar. The U.K. and U.S. numbers are also similar even if slightly higher.”

Franc’s safe-haven rally cooled by 4% this year

The Swiss franc’s status as a safe-haven currency has helped suppress inflation by making imports cheaper as the currency strengthens. As investors sought protection from widespread market volatility in 2025, the Swiss franc rose more than 12% against the dollar, but the greenback has clawed back around 4% against the franc so far this year.

Gedeon Tumong, head of finance specialization at Switzerland’s HIM Business School, told CNBC that Switzerland benefits from a “safe haven dividend.”

Unlike the U.S., the U.K. and the euro zone, Switzerland imports credibility as much as it imports goods. Consequently, foreign capital inflows support the Swiss franc, the strong Swiss Franc by extension curbs imported inflation and low inflation provides enough arguments for the central bank to maintain lower rates than the Fed, the Bank of England or the European central Bank.

Gedeon Tumong, head of finance specialization, HIM Business School

Tumong added that energy accounts for only about 3.5% of the Swiss inflation basket, versus roughly 7% in the euro zone, helped by hydropower and nuclear generation. He also pointed to Switzerland’s constitutional debt brake, which requires balanced budgets and keeps the government from having to offer higher bond yields to attract investors.

UBS sees hike risk moving earlier than June 2027

UBS economists had penciled in a preliminary SNB hike for June 2027, but a note earlier this month flagged reasons the move could come sooner. The bank cited the franc’s recent depreciation alongside elevated oil prices and resilient growth in the U.S. and euro zone economies.

“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,” UBS economists wrote in the note. They added that while inflation is unlikely to breach 2% over the next 12 to 18 months, “the SNB has a history of surprising markets.”

LSEG data cited by CNBC show traders positioning for the SNB’s key rate to reach at least 0.75% by next September, a level still low by international standards but a marked shift from the current 0% floor. The SNB has intervened in currency markets before to manage franc strength and has signaled it would do so again if needed.

The BlockWest read. A 0% Swiss rate against a tightening world has kept the franc a magnet for capital fleeing volatility elsewhere, including flows that have touched digital asset allocators using Switzerland’s crypto-friendly banking corridors. If the SNB starts hiking by early 2027 as traders now expect, that carry advantage narrows, and treasuries parked in franc-denominated instruments for safety will face a genuine opportunity cost for the first time in years.

The SNB’s next scheduled policy decision will show whether the roughly 50-50 odds priced for December harden into an actual move, with UBS economists already flagging that a hike could land well before their original June 2027 estimate.

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