Nomura economists expect the SNB to keep its policy rate at 0.00% on 19 March and for the foreseeable future. They see low but positive Swiss inflation, resilient GDP growth and rising global energy prices, but highlight Swiss Franc appreciation as a key downside risk to inflation and a trigger for potential FX intervention rather than rate cuts.

Franc strength and energy-driven inflation risks

"We expect the SNB to leave its policy rate on hold at 0.00% at its 19 March meeting. Although CPI inflation is low (it has been 0.1% y-o-y for the past three months), it remains within the SNB’s target range of 0-2%, has printed in line with the SNB’s latest forecast in 2026 so far, and policymakers likely expect it to rise. "

"A key concern for the SNB will be CHF appreciation pressures stemming from the current risk environment, which may encourage FX intervention from the central bank. The SNB said in a statement since the conflict began that “in view of international developments, we are increasingly prepared to intervene in the foreign exchange market”. "

"We therefore believe that FX intervention to stem currency appreciation pressures and their inflationary effects is more likely than a policy rate cut to a negative rate. "

"Indeed, Chairman Schlegel has commented on many occasions that the bar to lowering the policy rate below zero is high and commented in February that negative inflation readings would not cause an immediate alarm, suggesting the SNB is more willing to tolerate some slight deflation than a negative policy rate."

"Further ahead, our central forecast is for the SNB’s policy rate to remain at 0.00% for the foreseeable future, as we believe inflation will accelerate."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)