Swiss National Bank Pauses at 0%: Inflation Edges Up Amid Trade Tariff Pressures

With its policy rate at 0% on September 25, 2025, the Swiss National Bank (SNB) signaled a pause after six straight rate reductions beginning in December 2023. Rising tourist and import costs caused inflation to show a slight increase, from -0.1% in May to 0.2% in August. Assuming the policy rate stays unchanged, the SNB forecasts that inflation will be steady at 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027. Although Switzerland has the cheapest borrowing costs among large central banks, the SNB keeps a close eye on price stability and stands prepared to step into foreign exchange markets as necessary.

With GDP growth slowing to 0.5% in Q2 following a robust Q1 performance supported by early drug deliveries to the U.S., the Swiss economy exhibited signs of weakening. The 39% U.S. tax on Swiss exports is a serious worry since it has greatly affected export-driven sectors like machinery and horology. Although the tariff bears strongly on investment and trade, its consequences for the services sector have been more restricted to date. Notwithstanding these obstacles, the SNB keeps its 1%–1.5% GDP growth forecast for 2025 but expects 2026 growth decelerating below 1%.