Swiss rates likely to stay on hold, SNB minutes indicate

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Central bank expects inflation to increase in coming months

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Swiss inflation edged higher in December

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SNB sees current monetary conditions as "appropriate"

By John Revill

ZURICH, Jan 8 (Reuters) - The Swiss National Bank's policymakers expect inflation to revive gradually, the minutes of their latest rate-setting meeting showed on ?Thursday, which will help it avoid cutting or hiking interest rates. The SNB left its policy rate unchanged at ?0% on December 11, as widely expected, keeping in place the lowest interest ?rate among the world's major central banks.

The central bank said ?that although inflation had ?declined, its forecasts over the longer term were in line with its 0-2% target it calls price stability. The ?SNB issued a forecast in December saying ?inflation would average 0.3% in 2026 and 0.6% in 2027, and the Federal Statistics Office said on Thursday that prices had edged up ?0.1% in December.

"Having declined somewhat in recent ?months, inflation ?is likely to increase again over the course of the forecast period, thus remaining within the range consistent with price stability," the SNB minutes from its December ?decision read.

"In light of the outlooks presented with regard to inflation and the economy, the Governing Board determined that monetary conditions are currently appropriate."

SNB SAW NO REASON TO ALTER RATES

In this situation, neither increasing nor decreasing interest rates was seen as appropriate, the SNB said. It is only the second time the central bank ?has ?released the minutes of its decision-making process, following its first publication in October.

Karsten Junius, an economist at J.Safra Sarasin, said the minutes showed the SNB had ?no clear bias on the direction of rates.

"By stressing their neutral stance, I think this points to the SNB avoiding either rates cuts or hikes for the foreseeable future," said Junius, who expects no changes for the next 18 months.

The SNB also noted that the economic outlook has improved slightly due to the reduction in U.S. tariffs on Swiss goods from 39% to ?15%.

Swings in economic growth were seen during 2025 as Swiss companies rushed to supply the U.S. before the tariffs were imposed, pushing GDP negative in the third quarter.

"These compensations are now expected to have ?been completed," the SNB said. (Reporting by John Revill; Editing by Dave Graham and Hugh Lawson)