SNB's Schlegel: Switzerland is not a currency manipulator except when it needs to be

Chairman of the Swiss National Bank (SNB) Martin Schlegel noted on Monday that uncertainty surrounding inflation has made it more difficult to actively manage foreign currency flows, noting that there are functionally no suitable alternatives for central banks to manage their holdings without US Treasuries, exposing countries to long-standing FX flows.

Key highlights

SNB policy rate is our main instrument, but when necessary we can intervene in the FX markets.

SNB must ensure price stability during uncertainty.

Swiss 2025 growth will be lower than expected.

Uncertainty is currently very high. The Swiss franc is often sought as a safe haven in times of uncertainty.

The outlook for Swiss inflation is currently very unclear.

We're seeing inflation primarily from domestic services.

The foreign contribution to inflation is negative.

The franc is being bought by domestic and foreign investors.

Uncertainty is toxic for growth.

Gold on the balance sheet is not necessarily an advantage.

Too much gold on the balance sheet is not an advantage.

There is currently no alternative to US Treasuries.

Negative interest rates are an extraordinary measure, but it had the desired effect when used last time.

We cannot rule out negative interest rates.

Switzerland is not a currency manipulator, we have only intervened to pursue our mandate.

We have only intervened to slow the overvaluation of the franc, not to gain a competitive advantage for Switzerland.