Swiss Franc Really Strengthened a Lot, SNB’s Schlegel Says
(Bloomberg) — The Swiss franc’s appreciation has been very noticeable and policymakers remain ready to intervene in foreign-exchange markets if needed for price stability, according to central bank President Martin Schlegel.
The Swiss National Bank chief was questioned on recent strengthening amid haven flows spurred by the weakening of the dollar since the White House unleashed a global trade war. The franc touched a decade high against the US currency in April.
“The Swiss franc appreciated really a lot,” Schlegel told a digital-money event in Zurich on Tuesday. “We have always said that we’re ready to intervene in the FX market if that’s necessary for price stability.”
That latter line is a standard one for the SNB, which has long maintained that selling the franc is in its repertoire to stop the currency from appreciating. Still, the most recently available data, for the final quarter of 2024, showed the central bank largely keeping out of foreign exchange markets for a year.
Schlegel has previously insisted that fear of US repercussions won’t hold policymakers back from selling the franc. The SNB was termed a currency manipulator by the US Treasury during Donald Trump’s first presidency.
An alternative to dissuade flows into the franc would be to cut borrowing costs again. The problem there is that the SNB has already brought its rate down to 0.25%, meaning that another reduction could put Switzerland on the brink of subzero monetary policy, taking a toll on the banking system.
Asked on prospects for the central bank’s upcoming decision in June, and to confirm that the SNB hasn’t ruled out going to zero, Schlegel said “no, and neither have we ruled out negative interest rates.” He added that “no one likes” subzero borrowing costs, but policymakers will introduce them if necessary.
“Most important is to focus on the mandate and stay calm and filter out the noise,” he said.
(Updates with rate comments starting in sixth paragraph)
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