Switzerland sticks to zero interest rates – we’ve been here before 

Zero interest rate maintained: SNB strikes a delicate balance in December 

On 11 December 2025, the Swiss National Bank (SNB) published its final monetary policy assessment of the year. After six consecutive rate cuts beginning at the start of 2024 and a return to a zero interest rate in June 2025, the debate on the future of monetary policy remains highly charged. Today, the SNB decided to keep rates on hold once again, and refrained from venturing into negative interest rate territory – an understandable decision as inflationary pressure remained virtually unchanged compared to the previous quarter, while Switzerland's economic outlook brightened slightly with lower US tariffs and improved international developments.

The return to zero interest rates 

Following a wave of inflation in 2022–23, the SNB raised its policy rate to a peak of 1.75%. This was followed by a series of cuts beginning in March 2024: small steps at first but then, in December 2024, 50 basis points. Since June 2025, Swiss interest rates have stood at zero – a response by the SNB to doggedly low inflation. This policy was continued in September 2025, as inflationary pressure remained unchanged, but the economic outlook for Switzerland continued to be uncertain.

A tough call for the SNB 

Inflation remained below expectations again in early December 2025, at 0.0%: import prices fell, while the strong franc coupled with weak economies among our trading partners weighed on our exports. The provisional agreement with the US on a lower tariff changes nothing. For as long as the global economy remains fragile, there will be little sense of stability for exporters.  

Some of our major European trading partners are feeling the pinch. With productivity growth low or stagnant, an increasingly ageing population, room for improvement in the implementation of structural reforms and unit costs high, growth threatens to remain sluggish going forward. Our suppliers are feeling this too. This requires the SNB to stay flexible. It is therefore especially reassuring to hear the SNB’s leadership affirm that the barriers to negative interest rates remain high.

Challenges for banks in a zero interest rate 2026  

Zero interest rates increase pressure on margins and make it vastly more difficult for banks to do business. Savings deposits generate almost no income, and credit margins contract. Customers look for alternatives for their savings such as equities, which offer better returns; and by withdrawing their deposits they make it more difficult to refinance loans. There is also only limited scope for passing negative interest rates on to retail customers and small companies, as the Banking Barometer 2025 explains. This could be compensated by increasing lending on the back of low interest rates or by cross-subsidising the rate on deposits. Overall, the outlook for interest business is decidedly mixed.

Banking on competitiveness  

In addition, regulatory pressure is mounting, especially with a threatened deluge of additional regulatory demands as part of the ongoing “too big to fail” debate. This is forcing banks to adapt to an environment of persistent low interest rates, higher capital requirements and a squeeze on margins.  

For these reasons among others, it is vital to safeguard the competitiveness of our Swiss financial centre in the coming year. We need to keep a close eye on the deregulatory trends among our foreign competitors. If Switzerland were to take a different path on banking regulation from the rest of the world, it would cost the country dear.