SNB Doubles Down: Zero-Interest Rate Policy Fuels Economic Expansion in 2025

Switzerland's monetary experiment keeps printing wins—or at least that's what the central bank wants you to believe.

The free money train rolls on

The Swiss National Bank just reaffirmed its commitment to rock-bottom rates, claiming the policy continues to stimulate growth. Never mind that pension funds are bleeding out or that real estate bubbles keep inflating—the SNB's balance sheet isn't going to inflate itself.

Deflation? What deflation?

While other central banks flirt with tightening, Switzerland's negative-rate party enters its 11th year. Local banks now charge you for the privilege of holding your francs—because nothing says 'sound monetary policy' like penalizing savers to prop up overleveraged institutions.

The ultimate contrarian play in a world gone yield-crazy—unless you count stuffing cash in a mattress as an investment strategy.

SNB believes the effect of US tariffs is manageable

At their last meeting, on September 25, officials at the SNB opted to maintain interest rates, believing the current policy is strong enough to boost inflation in the months ahead.

The central bank explained that its September decision to stop cutting rates and maintain zero borrowing costs reflected a view that US tariffs on Switzerland were not overly disruptive. Despite relatively high levels of uncertainty, policymakers noted that the country’s economy was showing moderate growth.

Gero Jung, head of investment strategy at Banque Cantonale du Valais, noted that the need for potential further monetary easing was judged as not being “appropriate” at the current juncture. He continued to say that in the absence of major shocks, the current status quo of a zero policy rate remains the most likely scenario.

Alexandro Bee, an economist at UBS in Zurich, noted that they saw little new information in the paper but did find a few points of interest. He pointed to the lack of alternative scenarios — for example, one in which negative interest rates were implemented — as particularly telling. The SNB probably also avoided delivering any surprises in the summary, which is why it had fewer details than minutes published by other central banks, Bee said.

Since the US announced the tariffs, SNB officials have appeared to downplay concerns about the 39% rate, which is significantly higher than the rates faced by other countries. However, analysts have started revising their forecasts. The government even lowered its growth estimate for 2026 from 1.2% to 0.9%, citing the import levies.

According to reports, inflation ROSE to 0.2% in September, but officials anticipate a moderate increase soon.

Swiss government will release summary after interest rate decision

The summary the bank released is the first of its kind, following Schlegel’s push for greater transparency, similar to that of other advanced economies, such as the US. According to the Swiss government, such a summary will be unveiled four weeks following each interest-rate decision. 

Analysts have also noted that the measure provides the central bank with a new avenue to influence markets amid ongoing efforts to slow franc inflows, even as the currency approaches its strongest point against the euro in ten years. 

On the other hand, some UBS economists hinted on Wednesday that the Swiss National Bank is likely stepping in to curb the franc’s appreciation. In their summary, policymakers, however, made only brief remarks on the franc.

They commented, “Geopolitical shocks could lead to money flowing into currency areas regarded as SAFE havens by investors. This could result in an appreciation of the Swiss franc. This risk is currently being countered somewhat by the relatively high interest-rate differential.”

Nonetheless, the Swiss government had clarified earlier that it is not the aim of this summary to inform about individual members’ opinions and considerations, adding that it will attempt to summarize only “the most important elements” of discussions in the governing board to make them comprehensible to everyone. Unlike their counterparts, Schlegel said they will not share all information.

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