Swiss National Bank keeps interest rate unchanged at zero

BERN: The Swiss National Bank (SNB) left its benchmark interest rate unchanged on Thursday despite a recent uptick in inflation driven by higher fuel costs stemming from the Iran war.

The decision, which extended to a year the period the SNB has kept borrowing costs at 0%, the lowest level among the world’s main central banks, was expected by markets and all the analysts polled by Reuters.

“Inflation has risen in recent months as a result of higher energy prices,” the SNB said in a statement. “Medium-term inflationary pressure, however, is virtually unchanged compared with the last monetary policy assessment.”

The Swiss franc fell slightly after the decision, with the dollar last up 0.11% at 80.03 francs.

In contrast to the SNB, the European Central Bank already raised rates last week to counter a build-up in price pressures, the first major central bank to do so. Meanwhile on Wednesday, the U.S. Federal Reserve left interest rates unchanged despite inflation stuck well above its target.

The Bank of England and Norway’s central bank are also due to give policy updates on Thursday, with neither expected to change borrowing costs.

Swiss inflation remained at 0.6% in May, the highest level since November 2024, driven by a spike in fuel prices, but core inflation, which excludes volatile energy costs, remained low at 0.3%. Both readings are well within the SNB’s 0%-2% target range which it defines as price stability.