• The Swiss National Bank (SNB) declined to comment on a media report that it expects to keep its policy rate at 0% until the end of 2027.
  • The report, citing unnamed sources, suggests the SNB is prioritizing currency stability and low inflation over rate hikes.
  • Markets interpret the stance as a signal of prolonged ultra-low rates, weighing on the franc and Swiss bond yields.

The Swiss National Bank declined to comment on a media report Thursday that it expects to keep its key interest rate at zero through the end of 2027, according to a spokesperson.

The report, from a Swiss newspaper citing people familiar with the central bank's internal forecasts, comes as the SNB has held its policy rate at 0% since September 2022, after a brief hike to 0.5% in June of that year. The central bank has been battling deflationary pressures and a strong franc, which has weighed on Swiss exports.

"We do not comment on market rumors or internal forecasts," the SNB spokesperson said in an emailed statement.

The SNB's next monetary policy decision is scheduled for March 21. Economists polled by Reuters expect no change in the rate. The central bank's current inflation forecast, published in December, sees inflation averaging just 1.0% in 2024 and 0.9% in 2025, well below the SNB's target range of 0-2%.

"The report underscores the SNB's commitment to maintaining an accommodative stance as long as needed," said Maxime Botteron, an economist at Credit Suisse. "With inflation well under control and the franc still strong, there's little urgency to tighten."

The Swiss franc weakened slightly against the euro following the report, trading at 0.9855 per euro as of 10:45 a.m. in Zurich. The yield on the 10-year Swiss government bond fell 2 basis points to 0.68%.

Some analysts questioned whether the reported timeline was realistic given potential changes in the global environment. "Forecasting rates five years out is highly uncertain," said Karsten Junius, chief economist at Bank J. Safra Sarasin. "But it does reflect the SNB's view that rate normalization will be very gradual."

Attempts to reach the SNB for further comment were unsuccessful.

Correction: An earlier version of this article misstated the date of the SNB's last rate change. It was September 2022, not June 2022.