Survey shows Swiss bankers anticipate SNB to hold zero rate into 2027

All respondents to the survey anticipate the Swiss National Bank maintaining its policy rate at zero percent for the remainder of this year. Looking ahead to 2027, six in ten expect the rate to stay unchanged throughout the entire year.

The other 40% of respondents foresee the SNB beginning to raise rates in 2027. With a single exception, they predict an increase to 0.25%, while the lone outlier expects the rate to reach 0.50% by the close of next year.

This distribution of views is noteworthy. Although inflation is rising worldwide, Switzerland has largely bucked the trend. The most recent inflation figures still indicate a greater threat of deflation than of inflation.

At present, central bankers can be reassured that inflation has not yet moved toward zero or become negative. That may partly stem from the US-Iran conflict, which is bolstering global price pressures. Without that external effect, Switzerland could be facing a very different scenario this year.

The Swiss National Bank received an opportunity from the Covid crisis, but did not take full advantage. There is a concern that deflation and unconventional tools like negative rates and quantitative easing may return. The author remains skeptical, believing that the overall risk balance for Switzerland is weighted to the downside, especially given that positive spillovers are less pronounced there than elsewhere.