Swiss National Bank holds rates as expected, despite rising inflation

By John Revill

BERN, Sept 24 (Reuters) - The Swiss National Bank kept its benchmark interest rate on hold on Thursday, resisting pressure to counter rising inflation caused by war in the Middle East which has seen other central banks hike borrowing costs.

The SNB kept its policy rate at 0%, as forecast by all economists polled by Reuters, as well as markets, which gave a 94% probability for no change before the decision.

"Medium-term inflationary pressure has increased only slightly. Monetary policy is appropriate to keep inflation within the range consistent with price stability and supports economic development," the SNB said in a statement.

The central bank also said it is willing to be active in the foreign exchange market as necessary to ensure appropriate monetary conditions.

Previously it said it had an increased willingness to intervene in the foreign exchange markets to counter an excessive appreciation of the franc. The currency has weakened against the euro and the dollar in recent weeks.

The Swiss franc weakened slightly after the decision, to trade roughly flat against the euro at 0.9395 francs and at 0.8247 francs against the US dollar.

The Swiss central bank has kept its policy rate at 0%, the lowest among major central banks, since June 2025, despite Swiss inflation accelerating to its highest level in two years.

Still, the acceleration in inflation to 0.8% in August, driven by surging fuel prices stemming from the conflict in Iran, was well within the SNB's target range of 0%-2%, which it calls price stability.

This allowed SNB to keep its benchmark rate unaltered, contrasting with the European Central Bank which earlier this month raised rates. So too did the US Federal Reserve, which signalled more rate increases were on the way.

Although the Bank of England last week kept its interest rates unchanged, it warned they may have to go up if the Iran war drags on and pushes energy prices higher.