A Reuters poll conducted on 11–15 June found unanimous expectations that the Swiss National Bank will keep its policy rate at 0% on 18 June, with all 35 economists making the same call. Looking further out, 28 respondents who provided forecasts through end-2026 also projected no change this year, while only four anticipated one or two quarter-point increases in 2027.
The SNB, Switzerland’s independent central bank, has a mandate to ensure price stability over the medium and long term and defines that as an annual rise in the Swiss Consumer Price Index (CPI) of less than 2%. Policy is set by the Governing Board and the bank can also intervene in foreign exchange to limit excessive Swiss franc (CHF) strength; it previously ran a euro peg between 2011 and 2015. The SNB meets quarterly—in March, June, September and December—to decide policy and publish a medium-term inflation forecast, using interest rates and exchange rates to maintain appropriate monetary conditions.
Current Policy Outlook And Inflation Dynamics
We see the Swiss National Bank holding its policy rate at 0% this week, in line with broad market consensus. With Swiss inflation last reported at a mild 0.8% in May, well below the 2% target, there is no pressure on the central bank to act. This widespread expectation means the interest rate decision itself is likely already reflected in the Swiss franc’s current value.
Our focus should therefore shift to the language in the monetary policy statement and the updated inflation forecast. Any change in how the SNB describes the franc’s valuation or any upward revision to its inflation outlook could trigger a market reaction. This suggests that short-term volatility options on currency pairs like EUR/CHF could be a viable strategy to trade the post-announcement drift.
Policy Divergence, Carry Trades, And FX Intervention
We are observing a clear policy divergence, with the European Central Bank maintaining its rate at 1.5% and the U.S. Federal Reserve holding steady at 2.0%. This differential makes the Swiss franc an attractive funding currency for carry trades, where traders borrow in CHF to invest in higher-yielding assets abroad. As long as the SNB remains on hold, we expect this dynamic to continue weighing on the franc against the euro and dollar.
We also note that the SNB’s foreign currency reserves have trended down slightly over the past quarter, indicating it has not been intervening to weaken the franc. This hands-off approach reinforces their comfort with the current exchange rate, which helps keep import prices low. However, traders should remember the SNB’s history of sudden policy shifts, meaning tail-risk hedges against an unexpected announcement remain prudent.
