SNB Eases Threat of Franc Intervention as Rate Held at Zero
(Bloomberg) — The Swiss National Bank dialed down its threat of currency intervention as a weakening in the franc prompted it to pivot toward more vigilance on inflation.
Officials led by President Martin Schlegel left their interest rate at zero, the world’s lowest level, while raising projections for consumer prices slightly throughout their forecast horizon.
They removed prior language about “increased willingness” to stem gains in the franc after haven inflows receded. The weaker currency makes imports more expensive, feeding into inflation.
“We are also willing to be active in the foreign-exchange market as necessary to ensure appropriate monetary conditions,” Schlegel told reporters, in a reversion to wording used before the outbreak of the Middle East war. “Medium-term inflationary pressure has increased only slightly.”
While limited, the remarks on Thursday in Bern implicitly acknowledge an evolving price backdrop after pronounced declines in the franc to levels below those prevailing before the conflict.
Those market moves reflect how the Swiss have persisted with ultra-low borrowing costs at a time when peers from the US Federal Reserve and the European Central Bank have switched to tightening to contain the domestic impact of surging energy bills. Norway hiked rates too on Thursday.
What Bloomberg Economics Says:
“The decision reinforces our expectation that the policy rate will remain on hold at 0% for an extended period — until late 2027 — despite tightening pressure from other central banks and more aggressive market pricing.”
—Jean Dalbard, economist. For his SNB REACT, click here
The SNB decision, supported by inflation of just 0.8% in August, cements such divergence for at least another quarter. Still, it shows greater wariness on consumer prices after the franc hit the weakest in 17 months against the euro and its lowest level against the dollar since last June.
“This lays the groundwork for the SNB to eventually join the hiking cycle, although the timing is fluid and contingent also on the actions by the Fed and especially the ECB,” said Luigi Buttiglione, chief executive officer at LB Macro and a former Bank of Italy official.
He sees the possibility of a Swiss hike as soon as the next quarterly meeting in December if peers such as those in the euro zone continue tightening aggressively. Absent that, Buttiglione says a move in the first quarter is more likely.
Schlegel declined to offer guidance on the SNB’s future policy path. Most analysts don’t anticipate a rate increase before 2028.
The Swiss franc initially fell as much as 0.4% to 0.9433 per euro after the announcement, before paring losses to trade around 0.9420.
To curb gains in the franc at the start of the conflict, the SNB had said that it was increasingly willing to step into foreign-exchange markets. With the currency now trading at pre-war levels, that heightened threat is no longer necessary.
“We saw pressure on the Swiss franc, appreciation pressure, and in order to dampen that pressure — because an abrupt franc appreciation could endanger price stability — we had this increased willingness to intervene,” Schlegel told reporters. “The Swiss franc has depreciated a little bit, but we are still ready to intervene.”
The SNB published a tally of its action in currency markets with a three-month delay. Numbers for the second quarter will be released at the end of September.
A policy shift officials could contemplate would involve switching tack by selling foreign-currency assets to strengthen the franc and limit imported inflation, shrinking the SNB’s out-sized balance sheet in the process.
While Schlegel didn’t explicitly exclude such action, he insisted that there’s no goal for a level of assets held by the central bank.
The SNB lifted all of its forecasts for consumer prices, predicting 0.7% in 2026 and 0.8% in each of the following two years.
While price pressures are increasing mainly because of external factors, domestic forces are mixed. On the one hand, electricity bills are set to fall. Economic growth however has outperformed forecasts, with output excluding sporting events surging by 1.5% in the second quarter.
The SNB predicts expansion to come in between 1.5% and 2% this year and around 1.5% in 2027. Developments in the global economy pose the main risk to growth, according to the central bank.
“The situation in the Middle East could deteriorate further and curb global economic activity more strongly,” said Petra Tschudin, one of the SNB’s policymakers. “The trade policy environment and exchange rate developments also continue to be sources of uncertainty.”
–With assistance from Kristian Siedenburg, Harumi Ichikura, Joel Rinneby, Sonja Wind, Alexander Weber, Nick Heubeck, James Regan and Phil Serafino.
(Updates with quotes throughout)
©2026 Bloomberg L.P.
