SNB Rate Policy and Swiss Economic Outlook

UBS expects the SNB to hold the policy rate at 0% through early 2027 given low domestic inflation and limited energy price spillover. The Swiss franc is projected to weaken as safe-haven demand subsides, with a 12-month EURCHF forecast of 0.93.

Key Takeaways

• 1.The SNB is expected to maintain its policy rate at 0% until mid-2027 due to subdued inflation and a lower sensitivity to energy price shocks.
• 2.Switzerland is relatively insulated from energy inflation due to the low weighting of energy in its consumer price index (CPI).
• 3.The Swiss franc is expected to depreciate against the Euro and USD as geopolitical tensions in the Middle East ease.

Table of Contents

• Global policy divergence and FX interventions
• Swiss yields to remain broadly stable
• Modest depreciation of the Swiss franc
• Positive scenario with weaker CHF
• Negative scenario: CHF sharply higher

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