Introduced in June 2019 to replace the older target range, the SNB policy rate is a single key rate published at each quarterly monetary-policy assessment. The SNB enforces it by paying (or charging) commercial banks on their sight deposits above an exemption threshold.
Through this mechanism, Saron — the secured overnight reference rate that replaced CHF Libor — closely tracks the SNB policy rate. Mortgages priced on Saron, business loans and savings rates therefore move with each SNB decision.
Between 2015 and 2022, the SNB policy rate was deeply negative (down to −0.75%) to weaken the franc and fight deflation. The SNB hiked sharply through 2022–2023 to a peak of 1.75% as inflation rose, then cut again from March 2024 as inflation returned firmly inside the 0–2% target band.
When the SNB cut the policy rate from 1.25% to 1.00% in 2024, the average new 10-year fixed mortgage in Switzerland fell within weeks from about 2.30% to 2.10%, saving CHF 1,000 per year on a CHF 500,000 loan.