Nomura Predicts Swiss National Bank Will Hold Rates at 0.00% Through 2027 Amid Resurgent Inflation and Currency Depreciation

ZURICH — The Swiss National Bank (SNB) is widely expected to keep its benchmark policy rate anchored at 0.00% during its upcoming September monetary policy meeting, according to a comprehensive economic outlook published by Nomura’s European Economics team. Led by prominent economists Josie Anderson, George Buckley, and Andrzej Szczepaniak, the analysis suggests that while Switzerland is experiencing a noticeable uptick in headline inflation and robust gross domestic product (GDP) growth, policymakers will likely maintain their current accommodative stance.

Nomura’s projections point to a steady monetary policy landscape in Bern well into the future, with no interest rate hikes anticipated before 2028 at the earliest. This outlook is underpinned by a complex interplay of domestic price pressures, fluctuating energy markets, geopolitical tensions in the Middle East, and a weakening Swiss Franc (CHF) that has relieved immediate deflationary concerns for central bank officials.

Main Facts

The core finding of Nomura’s latest research note is that the SNB will maintain its policy rate at 0.00% throughout the remainder of 2026 and across the entirety of 2027. This prolonged pause comes despite shifting macroeconomic dynamics within the Alpine nation.

• Interest Rate Outlook: The SNB policy rate is projected to remain at 0.00% until at least the end of 2027. Nomura does not foresee a potential rate hike discussion among policymakers until 2028, and even then, such a move would be contingent on sustainable inflation reaching the midpoint of the SNB’s target band.
• Inflation Rebound: Headline inflation in Switzerland has accelerated faster than anticipated, jumping to 0.8% year-on-year in August, up significantly from 0.4% in July. This marks the fastest pace of consumer price growth since September 2024.
• Core Inflation Divergence: Despite the jump in headline figures, core inflation remains subdued at 0.4% year-on-year, indicating that underlying domestic price pressures are not yet overheating.
• GDP Upgrades: Strong economic performance has forced economists to reconsider Switzerland’s growth trajectory. Even if economic output flatlines through the second half of the year, annual GDP growth is on track to hit 1.8%, comfortably outpacing the SNB’s June projection of "around 1%."
• Currency Dynamics: The Swiss Franc has experienced a notable softening, with the EUR/CHF exchange rate hovering near its highest levels since early 2025. This depreciation has naturally cushioned Swiss exporters while easing the central bank’s need for aggressive currency interventions.

Chronology: The Evolution of Switzerland’s Economic Landscape (2024–2026)

To understand the current posture of the Swiss National Bank, it is essential to trace the macroeconomic milestones that have shaped Switzerland’s monetary policy over the past two years.

Late 2024: Navigating Global Disinflation

Following a period of aggressive global monetary tightening to combat post-pandemic inflation, the SNB was among the pioneering major central banks to begin easing monetary policy. As inflationary pressures globally began to recede toward target bands, Switzerland grappled with a stubbornly strong Swiss Franc. The robust currency weighed heavily on import prices, pushing headline inflation down toward the lower bound of the SNB’s 0% to 2% target range and occasionally threatening deflationary headwinds.

Early 2025: Currency Pressures and Stability

By the beginning of 2025, the EUR/CHF exchange rate experienced downward pressure on the domestic currency, providing a welcome relief valve for Swiss manufacturing and export sectors. The SNB maintained a watchful eye on foreign exchange markets, utilizing verbal guidance and selective interventions to prevent excessive volatility. During this period, policy rates were adjusted downward to zero, where they established a stable baseline to support domestic credit and economic activity.

Mid-2026: The Energy Shock and the August Inflation Surprise

The turning point for the current monetary debate occurred during the summer of 2026. Following months of relative stability, headline inflation figures for July showed a modest reading of 0.4% year-on-year. However, the August data release shocked analysts by doubling to 0.8% year-on-year—the highest reading in nearly two years.

This sharp acceleration was primarily fueled by renewed volatility in global energy markets, exacerbated by renewed geopolitical friction and re-escalating conflict involving Iran. Concurrently, the Swiss Franc continued its gradual depreciation against the Euro, driving up the cost of imported goods and testing the SNB’s traditional tolerance for currency fluctuations.

Supporting Data and Economic Projections

Nomura’s analytical framework relies heavily on a granular breakdown of recent statistical releases and forward-looking economic indicators.

Inflation Breakdown: Headline vs. Core

The divergence between headline and core inflation is the cornerstone of Nomura’s argument for a prolonged SNB hold. While the headline consumer price index (CPI) accelerated to 0.8% year-on-year in August, driven predominantly by volatile energy components, core inflation—which strips out volatile items such as energy and fresh food—remained anchored at a modest 0.4% year-on-year.

Nomura’s models forecast that Swiss inflation for the third quarter of 2026 will align closely with the SNB’s internal projections, averaging around 0.7% quarter-on-quarter. Looking further ahead into the fourth quarter, inflation is expected to accelerate slightly to 1.0% quarter-on-quarter as winter energy demands take effect.

+------------------------+-------------------+-------------------+
| Economic Indicator     | Recent Data       | Nomura Forecast   |
+------------------------+-------------------+-------------------+
| July 2026 CPI (YoY)    | 0.4%              | -                 |
| August 2026 CPI (YoY)  | 0.8%              | -                 |
| August Core CPI (YoY)  | 0.4%              | -                 |
| Q3 2026 GDP / CPI      | -                 | 0.7% (QoQ)        |
| Q4 2026 CPI (YoY/QoQ)  | -                 | 1.0% (QoQ)        |
| Annual GDP Growth 2026 | -                 | 1.8%              |
+------------------------+-------------------+-------------------+

Upward Revision of GDP Growth

Switzerland’s economic resilience has consistently surprised forecasters throughout 2026. The SNB’s official June monetary policy assessment penciled in full-year GDP growth of "around 1%." However, Nomura’s European Economics team argues that this estimate is increasingly outdated.

According to their calculations, even if Swiss economic growth completely stalls and registers zero expansion during the second half of the year, carry-over effects from a strong first half will result in an annual expansion of 1.8%. Consequently, the SNB is widely expected to significantly revise upward its full-year GDP growth forecasts at the upcoming September meeting.

Foreign Exchange and the EUR/CHF Dynamics

The exchange rate between the Euro and the Swiss Franc (EUR/CHF) has traded near its highest levels since early 2025. A softer franc diminishes the immediate deflationary pressures that have historically plagued the Swiss economy, reducing the urgency for the SNB to actively suppress the currency’s value through aggressive foreign exchange interventions or negative interest rates.

Official Responses and Policy Considerations

While the SNB has remained tight-lipped ahead of its formal policy announcement, central bank communication channels and historical policy frameworks offer clear insights into how policymakers are likely to weigh competing economic pressures.

Assessing the Geopolitical Risk Premium

Nomura’s team points out a delicate balancing act facing SNB executives. On one hand, with the EUR/CHF trading at elevated levels, policymakers might logically conclude that there is little need to signal an increased willingness to intervene in currency markets.

On the other hand, the re-escalation of the Iran war and ongoing instability in the broader Middle East introduce severe tail risks to global energy supplies and safe-haven flows. Should global risk sentiment sour rapidly, international capital could flood back into the Swiss Franc, triggering an abrupt and disruptive appreciation. Consequently, the SNB may opt to retain its existing June guidance regarding foreign exchange operations as an insurance policy against sudden external shocks.

The Threshold for Future Action

The central bank’s overarching mandate is to maintain price stability, defined explicitly as an annualized inflation rate of between 0% and 2%. Nomura notes that for the SNB to initiate a discussion regarding rate hikes, inflation must sustainably and convincingly settle near the midpoint of this target range—specifically around 1.0% or higher.

Given that current core inflation remains subdued at 0.4% and headline figures are largely being driven by temporary energy shocks rather than structural domestic overheating, policymakers have ample justification to maintain their patient, data-dependent stance.

Implications for Markets, Businesses, and Households

The prospect of the Swiss National Bank keeping its policy rate at 0.00% through the end of 2027 carries profound implications for various segments of the domestic and international financial ecosystem.

1. For Borrowers and Mortgages

Swiss homeowners and corporate borrowers stand to benefit from a prolonged period of ultra-low borrowing costs. With the policy rate anchored at zero, domestic mortgage rates and commercial lending facilities are expected to remain highly favorable, supporting the real estate market and encouraging business investment without fueling runaway asset price bubbles.

2. For Foreign Exchange (FX) Traders

Currency markets will continue to monitor the EUR/CHF pair closely. Nomura’s assessment that the SNB may lean back toward standard FX intervention language suggests that while the central bank is comfortable with current depreciation trends, it retains a strict ceiling tolerance. Traders betting on persistent franc weakness must remain cognizant of geopolitical flashpoints that could instantly restore the CHF’s safe-haven appeal.

3. For Fixed Income and Yield Seekers

Institutional investors and asset managers holding Swiss franc-denominated fixed-income assets will continue to face a challenging yield environment. With short-term rates pinned at 0.00%, investors seeking meaningful positive real returns will be forced to look further out along the yield curve or increase their exposure to foreign debt markets.

4. For Exporters and Multinational Corporations

Switzerland’s globally oriented manufacturing, pharmaceutical, and luxury goods sectors will welcome the anticipated continuation of a softer Swiss Franc. A weaker currency enhances international price competitiveness, cushioning profit margins against sluggish demand in key export destinations across the Eurozone and North America.

Conclusion

As the Swiss National Bank prepares for its crucial September meeting, the consensus painted by Nomura’s economic team is one of steady continuity. Buoyed by an unexpected acceleration in headline inflation and robust GDP growth that far exceeds previous central bank estimates, the SNB nevertheless faces a nuanced environment characterized by sluggish core inflation and external geopolitical risks.

By keeping its policy rate firmly at 0.00% and signaling no inclination toward monetary tightening before 2028, the SNB is signaling confidence in the domestic economy’s underlying stability while retaining the flexibility to respond to external currency and energy shocks. For financial markets, the message is clear: Switzerland’s era of ultra-loose monetary policy is set to endure well into the medium term.