Switzerland's Rate Freeze Won't Last Amid Global Hiking Cycle

Switzerland's central bank defied its major peers by keeping interest rates at 0% on Thursday, but market watchers say it won't be able to avoid raising them for much longer.

The decision marked a divergence from policy decisions made by the European Central Bank, the U.S. Federal Reserve, and the Bank of Japan, which have all begun raising interest rates to combat rising inflation.

The Swiss National Bank (SNB) has a unique economy that has kept it somewhat insulated from the inflationary surge seen in neighboring nations and economic peers.

While Switzerland's annual inflation rate ticked up to 0.8% in August, driven by rising gasoline, diesel, and heating oil costs, it is still far below levels seen in the U.S., U.K., and euro zone, which have central banks with inflation targets of 2%.