Switzerland to continue zero interest rates

Metro India News | Hyderabad 

June 2026, Swiss National Bank (SNB) entered its 120th year as the central bank of Switzerland. With inflation near zero in the country, in the Monetary Policy Meeting due in 3rd week of June 2026, SNB is expected to retain 0% (zero) interest rate which is continuing for the past 1 year in Switzerland. The key reason is inflation which is near zero and within SNB’s tolerance band of 0% to 2%. SNB was among the few central banks to implement negative interest rates. 

SNB had deepest negative interest rate of -0.75% in year 2015 and for decades has been implementing zero or near zero interest rates in the country. SNB proved that developed economies can grow, sustain, and banking systems will remain stable even with negative interest rate policy. SNB was also the first to shift central banking focus from money supply to interest rates which also help price stability. Contrary to the popular belief, SNB has no role in banking secrecy laws of Switzerland which were relaxed in year 2018. 

SNB is considered as most independent and does not accept any political advices on monetary policy actions. It sets interest rates, currently zero, by targeting Swiss Average Overnight Rate (SARON) and through its interest rate policy manages the money supply. SNB maintains operational agreements with many other central banks. For instance, its swap line with US Federal Reserve allows SNB to immediately draw US dollars for its liquidity during any financial stress. 

Like UAE, US, and Germany, Switzerland’s SNB also has dual headquarters at Bern and Zurich. This dual system enables SNB to have political representation at Bern and financial market connect at Zurich.  Interestingly, SNB has private owners unlike other central banks. Swiss Federal government does not own a single share in SNB. Cantons (States) own 45%, Cantonal banks 15%, and the balance 40% is owned by the private individuals and companies including foreigners.

SNB ranks top in ensuring financial stability in the country. Towards this, wherever required it plays active role in the financial system and over commercial banks. For instance, to bail out Union Bank of Switzerland (UBS), SNB acted like an asset reconstruction company by acquiring $60 billion bad assets and over 5 years made $8 billion profits. SNB ranks 7th holding 1,040 tons of gold. 

SNB is also among the few central banks which directly invest in stock markets. Its current portfolio is $180 billion. It owns shares in Apple, Nvidia, Microsoft, Alphabet and the like. However, it does not own shares of any Swiss companies or of any other central banks. Its portfolio consists of 60% government bonds, 30% equities, and 10% other bonds.      

- Dr. Kishore Nuthalapati

The author is the Regional Director of PRMIA, US for Hyderabad Chapter. He is serving as the CFO of BEKEM Infra Projects Pvt Ltd, Hyderabad. Views are personal and are not of any organizations he is or was associated with.