SNB’s Tschudin: Interest rates should remain at their current levels
Swiss National Bank’s (SNB) governing board member Petra Tschudin said on Tuesday that there is no need for monetary policy adjustments as inflation is unlikely to fall further.
Additional comments
Our interest rates are where they should be.
We will only use negative interest rates when necessary.
We are keeping interest rates low, so that inflation remains in range of price stability (target range 0-2%).
Whether the Franc is correctly valued, overvalued or not is not decisive for our monetary policy.
What is important is how the exchange rate changes and its effect on inflation.
We are not in situation where we would like to see lower inflation.
The inflation forecast is where we want it (0.4% on average for Q4 2025).
FX interventions are possible.
Market reaction
At the press time, the USD/CHF pair trades marginally lower to near 0.8075. During the day, the Swiss Franc pair posted a fresh two-month high near 0.8100.
SNB FAQs
The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
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