Swiss National Bank's Schlegel: Will continue to monitor situation and adjust policy if necessary
Swiss National Bank (SNB) Chairman Martin Schlegel is speaking at the press conference after the June monetary policy assessment, explaining the reasons behind leaving the interest rate unchanged at 0%.
Key quotes
Swiss inflation rose slightly recently due to goods price inflation driven by higher oil prices.
Our medium-term inflation forecast is slightly higher, partly reflecting a weakening of the Swiss Franc.
Energy inflation is likely to decline in coming quarters.
Inflation forecast remains within 0%-2% target range.
Swiss Franc has weakened due to widening interest rate differentials to other currency areas.
Inflation will continue to rise in Q4 before declining in 2027.
Willing to intervene in forex market as necessary.
Swiss inflation at 0.8% is low by international standards.
Uncertainty remains high, will continue to monitor situation and will adjust policy if necessary.
Ready to intervene in the FX market, cannot give a direction.
We are not an island; what happens abroad matters in Switzerland.
Swiss franc has depreciated, but still ready to intervene in forex markets, if necessary.
The size of the balance sheet is not a goal of the SNB; size is just a result of monetary policy.
Interest rate differential is relatively high to the Euro and US Dollar; when this high, the Franc is less attractive.
Low interest rate makes Franc attractive for carry trade.
Important to draw the right conclusions from the Credit Suisse crisis.
Proposed measures are important and address regulatory weaknesses identified in that crisis.
Market reaction
USD/CHF is off the highs but 0.24% higher on the day at the time of writing, around 0.8265 following these comments.
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.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
