The Swiss National Bank (SNB) is increasingly prepared to intervene in foreign currency markets to mitigate appreciation pressure on the Swiss franc, according to SNB Chairman Martin Schlegel. Speaking at an event in Zurich, Schlegel noted the franc’s appeal as a safe-haven asset, particularly as geopolitical tensions rise in the Middle East. The SNB aims to maintain appropriate monetary conditions, using both its policy rate and foreign exchange market activity as tools. The Swiss National Bank is Switzerland’s central bank, responsible for the nation’s monetary policy and currency issuance. It strives to ensure price stability and contributes to the stability of the financial system.
Last week, the SNB maintained its key interest rate at 0% and affirmed its commitment to counteracting any excessive appreciation of the Swiss franc. A stronger franc can lower import prices, potentially undermining the central bank’s target inflation rate of 0-2%. The franc reached an 11-year high against the euro in early March and also strengthened against the US dollar. Recent inflation figures have been subdued, with rates of 0.1% recorded in both January and February.
Schlegel commented on the potential return of negative interest rates, which were previously employed to make the franc less attractive and ease appreciation pressure. However, he acknowledged the negative side effects associated with this policy, stating that the threshold for reintroducing negative rates is now higher. The central bank is carefully weighing its options as it navigates a complex global economic landscape.
Earlier on Tuesday, SNB Governing Board Member Petra Tschudin suggested that Swiss inflation is likely to increase in the short term, driven by upward pressure on global energy costs. This perspective underscores the SNB’s vigilant approach to managing inflation and currency stability in the face of evolving economic conditions.
