SNB Blames Franc Weakness on Foreign Interest Rate Expectations
The Swiss National Bank (SNB) has attributed the recent weakness of the Swiss franc to external factors, specifically higher interest rate expectations abroad. According to Petra Tschudin, a member of the SNB's Governing Board, the franc's depreciation since March 2026 has contributed to looser monetary conditions in Switzerland.
The SNB has kept its policy rate at 0% since June 2026, leaving little room for conventional easing. However, Tschudin emphasized that the bank remains prepared to intervene directly in foreign exchange markets if the franc moves too far, too fast in either direction. The primary concern is rapid appreciation, which could threaten price stability by dragging inflation even lower and squeezing Swiss exporters.
Switzerland's inflation has remained subdued compared to peers due to anchored low inflation expectations among households and businesses, as well as a relatively small role of oil in the country's inflation basket. The SNB revised its inflation forecasts at the June 2026 press conference, projecting an average of 0.6% across 2026 and 2027, and 0.7% in 2028.