Zurich, Sept. 25, 2025 – The Swiss National Bank (SNB) left its benchmark interest rate unchanged at 0% on Thursday, the lowest among major central banks, warning that steep U.S. tariffs on Swiss exports are already weighing on the country’s growth prospects for 2026.
Quick Takeaways
- Policy hold: SNB keeps its policy rate at 0% after seven consecutive cuts since 2024.
- Tariff shock: U.S. tariffs of 39% on Swiss exports are hitting machinery and watchmaking sectors.
- Economic outlook: Growth forecast trimmed to just under 1% for 2026, down from 1–1.5%.
- Currency reaction: The franc slipped slightly against the euro and the U.S. dollar.
- Next steps: SNB signals it could cut further if deflation risks return, but negative rates remain unlikely.
Tariffs Drive Policy Caution
The U.S. tariffs imposed in August by President Donald Trump represent the biggest headwind to Switzerland’s export-heavy economy. Chairman Martin Schlegel said sectors like machinery and watchmaking were particularly exposed, while services have so far been less affected.
“The U.S. tariffs present a major challenge and are likely to dampen economic activity,” Schlegel told reporters.
The SNB now expects GDP growth of just under 1% next year, trimming earlier forecasts, and warned unemployment would likely rise.
Currency Stability and Inflation Outlook
The decision to hold rates also reflected the Swiss franc’s relative stability against the euro. The currency edged to 0.9345 per euro and 0.796 per U.S. dollar after the announcement.
Economists, including GianLuigi Mandruzzato at EFG Bank, noted Switzerland’s small, open economy is highly sensitive to global trade shocks. Still, he described the tariff impact as “manageable” for now.
Inflation remains low but within the SNB’s 0–2% target band. The bank said it could cut again if inflation drops further, though reintroducing negative rates — which ran from 2014 to 2022 — would require “a much higher bar.”
Analysts See More Cuts Ahead
Some analysts expect the easing cycle to continue. Adrian Prettejohn, Europe economist at Capital Economics, forecast inflation averaging near zero in 2026, saying: “We do not think this is the end of the rate cutting cycle.”
What This Means for Everyday Readers
For Swiss households, today’s decision means borrowing costs stay exceptionally low, but tariffs could threaten jobs in key export industries. For global investors, the SNB’s cautious stance underscores how trade policy, not just inflation, is steering monetary decisions in smaller open economies.
Bottom line: Switzerland is holding the line at zero interest rates while bracing for fallout from U.S. trade policy. Whether it avoids slipping back into negative rates depends on how hard tariffs bite and where inflation heads next.
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