The US Dollar softened slightly from session highs near 0.7980 against the Swiss Franc but retains its overall bullish momentum, following the release of the Swiss National Bank (SNB) minutes.
The SNB’s latest minutes downplayed concerns over deflationary pressures and ruled out the likelihood of adopting negative interest rates. The central bank maintained its benchmark interest rate at 0%, dismissing speculation of further monetary easing. According to the minutes, inflationary pressures in Switzerland are not expected to remain persistently negative.
While the SNB acknowledged the challenges posed by increased US tariffs and shifting global demand, it noted that the Swiss economy remains resilient. Most economic indicators continue to point toward moderate growth, providing little cause for alarm.
The release of the minutes gave the Swiss Franc a modest boost, interrupting the US Dollar’s steady climb, which had been supported by cautious risk sentiment amid renewed US-China trade tensions. This followed US President Trump’s announcement of new restrictions on software exports to China.
Swiss National Bank (SNB) Overview
What is the SNB?
The SNB is Switzerland’s central bank, tasked with maintaining price stability over the medium to long term. It achieves this by managing monetary conditions, primarily through interest rates and exchange rate policies. The SNB defines price stability as keeping the Swiss Consumer Price Index (CPI) increase below 2% annually.
How do SNB interest rates impact the Swiss Franc?
The SNB Governing Board adjusts policy rates to meet inflation targets. Higher interest rates tend to strengthen the Swiss Franc (CHF) by attracting investors with better yields, while lower rates generally weaken the currency.
Does the SNB intervene in forex markets?
Yes. The SNB frequently intervenes to prevent excessive appreciation of the Swiss Franc, which could harm the country’s export sector. Between 2011 and 2015, it pegged the CHF to the Euro to limit its rise. The bank typically uses its substantial foreign currency reserves—mainly US Dollars and Euros—for such interventions. However, during periods of high inflation, especially driven by energy prices, the SNB may avoid intervening, as a stronger CHF helps reduce import costs and mitigates inflationary shocks.
When does the SNB decide on monetary policy?
The SNB meets quarterly—in March, June, September, and December—to review monetary policy. Each meeting results in policy decisions and the publication of a medium-term inflation forecast.
