Market Updates · Portfolio & Risk ·
SNB policy rate at zero: What it means for the Swiss franc
The SNB policy rate stays at zero, while the Fed and ECB hold their higher rates. What this means for the franc and for investments abroad.
Key points at a glance
- The SNB left its policy rate at 0% on 24 September 2026. Inflation was 0.8% in August, and according to the SNB, medium-term inflationary pressure is only slightly higher than in June.
- The Fed raised its target range to 3.75 to 4.00% on 16 September, and the ECB raised its deposit facility rate to 2.50% on 10 September. At the end of October, both left their rates unchanged.
- According to the SNB, the franc lost around 3% of its value against major trading currencies between the monetary policy assessments of June and September 2026. The SNB sees this as consistent with the wider interest rate differentials with other countries. Past performance is not a reliable indicator of future results.
- In the numerical example (illustration), an exchange rate can wipe out or increase the interest advantage of a euro investment.
The Swiss National Bank's policy rate remained at 0% on 24 September 2026, while interest rates in the US and the euro area rose in September. At the end of October, the Fed and the ECB left their rates unchanged. According to the SNB, the franc lost around 3% of its value against major trading currencies between the monetary policy assessments of June and September 2026. The SNB links this to the wider interest rate differentials. Data as of 30 October 2026. Past performance is not a reliable indicator of future results.
0%
SNB policy rate
As of 24 September 2026
3.75 to 4.00%
Fed, target range
As of 28 October 2026
2.50%
ECB, deposit facility rate
As of 29 October 2026
around −3%
Franc against major trading currencies, since June
As of according to the SNB, 24 September 2026
Past performance is not a reliable indicator of future results. This also applies to the franc's depreciation of around 3%.
In brief
Policy rate
SNB, Fed, ECB
Monetary policy assessment
Interest rate differential
Why is the SNB policy rate staying at zero?
Inflation measures how fast prices are rising. In August 2026, it stood at 0.8% in Switzerland.
The SNB's conditional inflation forecast is 0.7% for 2026 and 0.8% for each of 2027 and 2028. "Conditional" means it is an estimate based on the assumption that the policy rate stays at 0%. The ECB's September 2026 projection for the euro area is 3.0% for 2026, 2.5% for 2027 and 2.1% for 2028 (ECB, press release of 10 September 2026).
In its summary of the deliberations of 22 October 2026, the SNB states that medium-term inflationary pressure is only slightly higher than at the June assessment.
What did the Fed and the ECB do?
Both central banks raised their interest rates in September. At the time, the ECB's reasons for its move included the continuing inflationary pressure from the conflict in the Middle East.
At the end of October, both left their rates unchanged. The Fed decided on 28 October. Two members of the Federal Open Market Committee, the Fed's decision-making body, voted for an increase of 0.25 percentage points. Its statement says: "Inflation remains elevated." The ECB decided on 29 October and writes: "Energy prices have continued to rise, posing upside risks to the inflation outlook."
| Central bank | Rate | Latest decision | Next meeting |
|---|---|---|---|
| SNB | 0% | 24 September 2026 | 10 December 2026 |
| Fed | 3.75 to 4.00% (since 16 September 2026, previously 3.50 to 3.75%) | 28 October 2026, unchanged | 8 and 9 December 2026 |
| ECB | Deposit facility rate 2.50% (since 16 September 2026, previously 2.25%) | 29 October 2026, unchanged | 16 and 17 December 2026 |
Arithmetically, the ECB deposit facility rate is 2.50 percentage points above the SNB policy rate. For the Fed, the gap is 4.00 percentage points to the upper limit and 3.75 to the lower limit (own calculation). The article on bond prices when interest rates rise shows how interest rates affect bond prices.
How does the interest rate differential affect the franc?
According to the SNB Governing Board, the franc's depreciation is consistent with the wider interest rate differentials. Past performance is not a reliable indicator of future results.
A numerical example shows what happens when money is borrowed in francs and invested in euros, and why the exchange rate matters.
Loan in francs, investment in euros (illustration)
A fictitious person borrows CHF 10,000 at 0% and exchanges it into euros. A loan at 0% is purely a figure for calculation. The person invests the money there for one year at 2.50%, also as a figure for calculation. After one year, the person exchanges the money back and repays the CHF 10,000. If the euro exchange rate stays the same, a profit of CHF 250 remains. If the euro loses 5% against the franc, the amount is only CHF 9,738. That leaves CHF 262 short of the repayment. So the exchange rate has not only wiped out the interest advantage but turned it into a loss. The values are rounded and chosen freely, without costs and taxes. They are not a forecast.
The SNB states that, if necessary, it is also prepared to be active in the foreign exchange market. This refers to trading in currencies. Whether and when it will do so remains open.
What does this mean for foreign currency investments?
A higher interest rate abroad is only part of the calculation. The exchange rate also plays a role. It shows how many francs one euro costs. The article on regular income from investments explains how interest works as a source of income. A numerical example shows the effect of the exchange rate.
Numerical example (illustration)
A fictitious person invests CHF 10,000 in euros for one year. The interest rate used is the ECB deposit facility rate of 2.50%, purely as a figure for calculation. It is not an investment product, and real bonds yield differently. If the euro exchange rate stays the same, the result after one year is CHF 10,250. If the euro loses 5% against the franc, the result is CHF 9,738, which is CHF 262 less than the amount invested. If it gains 5%, the result is CHF 10,763. If the euro falls by around 2.4%, the interest advantage of CHF 250 is wiped out. The values are rounded and chosen freely, without costs and taxes. They are not a forecast.
Numerical example (illustration)
Depending on the euro exchange rate, CHF 10,000 becomes CHF 9,738, CHF 10,250 or CHF 10,763 after one year
Fictitious investment in euros, interest rate of 2.50% as a figure for calculation. Values rounded, without costs and taxes.
- Exchanging francs into euros
CHF 10,000 is exchanged into euros at the rate at the start of the investment and invested at 2.50%.
- One year of interest
The euro amount grows by 2.50%. At an unchanged exchange rate, this would be CHF 10,250.
- Exchanging back into francs
Euro 5% weaker: CHF 9,738. Euro unchanged: CHF 10,250. Euro 5% stronger: CHF 10,763.
Numerical example by the editorial team, no market data and no forecast. Interest rate: ECB deposit facility rate as of 29 October 2026.
A higher interest rate abroad is only part of the calculation: the exchange rate can wipe it out or increase it.
What are the risks and limitations?
- Currency: Investors who measure returns in Swiss francs bear the risk of fluctuating exchange rates when investing in euros or dollars. Losses due to exchange rate fluctuations are possible. Currency-hedged products also carry residual risks, and hedging involves costs.
- Borrowing: Anyone who borrows money to invest must repay the loan regardless of the outcome. Losses can exceed the amount invested.
- Interest and costs: Central bank decisions change interest rate differentials. Loan interest rates and fees can change and reduce returns.
- Interpretation: The link between the interest rate differential and the franc is the SNB's assessment. Movements that happen at the same time do not prove a cause.
- Numerical example: The deposit facility rate is not an investment product. Real investments have different returns, costs and taxes.
The article on diversification explains how risks can be spread across several investments.
What can be observed in the coming weeks?
The Fed's Federal Open Market Committee meets again on 8 and 9 December 2026. The next SNB monetary policy assessment is on 10 December 2026, with the press release at 09:30 and the press conference at 10:00. The ECB Governing Council meets on 16 and 17 December. According to ECB President Christine Lagarde, new projections are due in December. These are dates only, not an expectation about the outcome.
Conclusion
The SNB policy rate remained at 0% on 24 September 2026. Inflation was 0.8% in August, and according to the SNB, medium-term inflationary pressure is only slightly higher than in June. The Fed and the ECB raised their interest rates in September and left them unchanged at the end of October. According to the SNB, the franc lost around 3% of its value between June and the September assessment. The SNB sees this as consistent with the wider interest rate differentials. Whether a higher interest rate abroad benefits investors who measure returns in francs also depends on the exchange rate. Past performance is not a reliable indicator of future results.
Questions & Answers
Common questions around this topic, briefly answered.
What is the SNB policy rate, and when is the next decision?
The SNB left its policy rate at 0% on 24 September 2026. According to the SNB event schedule, the next monetary policy assessment is on 10 December 2026.
Why did the SNB not raise rates like the Fed and the ECB?
Inflation in Switzerland was 0.8% in August 2026. According to the SNB, medium-term inflationary pressure is only slightly higher than in June. The SNB's conditional inflation forecast of 0.7 to 0.8% for 2026 to 2028 is based on the assumption of a policy rate of 0%.
Does the franc weaken when other central banks raise interest rates?
The SNB sees the depreciation since June as consistent with the wider interest rate differentials. Whether and how the franc will react in future is uncertain. Movements that happen at the same time do not prove a cause. Past performance is not a reliable indicator of future results.
What happens when money is borrowed in francs and invested in euros?
A numerical example (illustration) in the article shows how a weaker euro can turn the interest advantage of such a transaction into a loss. The loan must be repaid regardless of the outcome, and losses can exceed the amount invested.
What risks do foreign currency investments carry for investors in Switzerland?
Investors who measure returns in Swiss francs bear the risk of fluctuating exchange rates. Losses are possible. Currency hedging can reduce them but does not eliminate them, and it involves costs. In the numerical example (illustration), an interest advantage of CHF 250 becomes a loss of CHF 262 if the euro is 5% weaker.
Related insights
All insights
Important information Information only, not investment advice or a solicitation. Investments carry risks up to total loss; past performance is not a reliable indicator.
This article is for general information and educational purposes only. It does not constitute an offer, solicitation or recommendation to buy or sell any financial instrument, nor does it constitute investment, legal or tax advice.
The content does not take into account your personal circumstances, objectives or risk tolerance. Please consult a qualified professional before making any investment decision.
Investing in financial instruments involves risks, up to and including the total loss of the capital invested. Past performance is not a reliable indicator of future results. Numerical examples are for illustration only and are not a forecast.
Third-party information has been obtained from sources believed to be reliable; no guarantee is given as to its accuracy or completeness. Market data refers to the stated data date and may have changed since.