SNB Keeps Policy Rate at 0% Amid Low Inflation and Firm Franc

The Swiss National Bank (SNB) has decided to keep its policy rate at 0% for now, maintaining Switzerland's lower-rate stance due to subdued inflation and a firm franc. The decision was made on September 24, with consumer prices increasing by 0.4% from the previous month.

Switzerland's annual inflation rate was recorded as 0.8% in August, which remains within the SNB's target range of 0-2%. A lower policy rate is attributed to the firm franc making imported goods cheaper and containing inflation pressure.

At 0%, the policy rate is actually negative in real terms when measured against current inflation, which stands at -0.8% due to consumer prices rising by 0.8% annually. The SNB monitors exchange rates as part of maintaining appropriate monetary conditions, and with the franc's recent weakening, there is a possibility that inflation pressure may increase.

The central bank will continue to assess monetary-policy conditions, taking into account factors such as energy prices and inflation expectations. For now, it has maintained its stance on keeping rates unchanged while inflation remains within its target range.