Swiss Franc Stuck Near One-Year Low Amid Ongoing Middle East Uncertainty
The Swiss franc has been hovering near its one-year low of $0.81 due to ongoing uncertainty over the Middle East conflict. This has kept attention focused on economic growth, inflation, and monetary policy.
Swiss economic growth, excluding sports, accelerated sharply to 1.5% in Q2 2026, while inflation slowed to 0.4% in July, its lowest level in four months. These readings suggest that higher energy prices linked to geopolitical tensions have had a limited pass-through effect on the economy.
The Swiss National Bank (SNB) had expected moderating growth and rising inflation due to these higher energy prices. However, foreign exchange interventions have supported exporters by limiting safe-haven flows into the franc and preventing excessive appreciation.
The SNB kept interest rates at 0% during its latest meeting and is expected to hold them there through 2027, with further cuts viewed as a contingency rather than the base case. Most economists predict the first rate hike in early 2028, while markets are pricing in one as early as March 2027.