ZURICH. The Swiss National Bank delivers its quarterly monetary policy assessment at 9.30 this morning, and the consensus in Zurich is unusually tight. Every economist in the Reuters survey, and the house views at UBS and ING, expects the policy rate to stay at zero, the lowest benchmark among major central banks and the rate Switzerland has held since June 2025. What has changed since yesterday’s calm preview is the currency. In recent days the franc touched a 17 month low against the euro, and its weakest level against the dollar since June last year.
Why a weaker franc changes the question
A cheaper franc makes imports dearer, and that is already in the inflation figures. Consumer prices rose 0.8 per cent in August, the fastest pace in almost two years, still inside the bank’s 0 to 2 per cent definition of price stability. The federal government last week kept its own forecast at 0.6 per cent for this year and next. Electricity bills are on track to fall. Switzerland has been relatively insulated from the price shock that the war in the Middle East has fed elsewhere. The live question for this morning is whether the Governing Board still describes that picture as comfortable.
President Martin Schlegel gave the markets a small puzzle earlier this month. In a speech he dropped the usual line that medium term inflation pressures are “virtually unchanged”, and he did not repeat the June pledge of a greater willingness to intervene in the foreign exchange market “if necessary”. Brian Mandt, chief economist at Luzerner Kantonalbank, who expects a first rate rise in March, reads the omission as deliberate. “Since Martin Schlegel took the helm, officials have increased efforts to create a certain degree of transparency,” he said. “That is why I expect that they will change their language.”
Language is policy here, because the balance sheet is the other tool. The bank bought 3.9 billion francs of foreign exchange this year, about $4.7 billion, to lean against inflows while the franc was strong. A weaker currency points the other way. One path, used in the 2023 inflation surge, is to sell foreign currency assets, let the franc firm, and limit imported inflation. Some commentators want the bank to use the softer exchange rate to shrink an outsized balance sheet whether or not inflation demands it. Second quarter intervention figures are due later this month.
Hold, hike, or wait until 2028
The rate itself is not where the argument sits. Ipek Ozkardeskaya, senior economist at Swissquote, put the majority view cleanly: if you have the luxury to wait and see, you should. Most economists do not expect a move before 2028, in line with what people familiar with the bank’s thinking told Bloomberg in July, when officials anticipated zero through the end of 2027 unless a new shock arrived. A minority has moved. Three of 19 forecasters now see a rise early next year. Claude Maurer, chief economist at BAK Economics, wants December, a “window of opportunity” while the softer franc helps exporters. Output adjusted for major sporting events rose 1.5 per cent in the second quarter.
Peers are not waiting. The Federal Reserve and the European Central Bank have been tightening. The Bank of Japan has raised again. The Bank of England has warned of a possible move in November. Norges Bank may lift borrowing costs today, in a decision that has split economists. Investors have started to price a Swiss increase by March. That divergence is part of why haven flows into the franc, driven by the Middle East war, have reversed. Schlegel’s problem at the 10am news conference is to acknowledge the weaker currency without inviting a bet that zero is about to end.
This assessment is also a handover. It is the last prepared by Carlos Lenz, chief economist for more than a decade. Martin Brown, director of the bank’s academic research unit, succeeds him in October. The forecasts Lenz leaves behind, and the verbs Schlegel chooses around intervention, will be the first file on Brown’s desk.
Markets will trade the adjectives for an hour and then look for the next cue, which is what a hold is designed to produce. December brings fresh projections and the last scheduled chance for drama this year. Until the statement lands at 9.30, Swiss monetary policy is a rate everyone expects and a sentence about the franc that nobody has seen. The rate is the boring part. The sentence is the story.