The Chairman of the Swiss National Bank (SNB), Martin Schlegel, shared concerns about potential US tariffs on pharmaceutical products. He warned these tariffs could heighten economic risks. He also mentioned that inflation is expected to rise slightly in the next few quarters, and the SNB will adjust its monetary policy if needed. Currently, the USD/CHF currency pair remains steady at around 0.7960. However, economic uncertainties linger, and the SNB is closely watching how things unfold.

Role of the Swiss National Bank

The Swiss National Bank, Switzerland’s central bank, works to maintain price stability. It aims for the Consumer Price Index (CPI) to rise by less than 2% each year. The bank adjusts interest rates to meet this goal, and higher rates tend to strengthen the Swiss Franc because they offer better yields. To keep the Swiss Franc competitive, especially against the Euro, the SNB intervenes in the foreign exchange market. It uses its large foreign exchange reserves to buy foreign currencies, helping to manage the value of the CHF. However, during times of high inflation, the SNB refrains from interventions to ensure the cost of energy imports stays manageable. The SNB’s Governing Council reviews monetary policy every quarter—specifically in March, June, September, and December. Each meeting results in a policy decision along with a medium-term inflation forecast. The warning from the Swiss National Bank on October 22, 2025, about US pharmaceutical tariffs emphasizes increasing economic uncertainty. The USD/CHF pair is steady at around 0.7960, but this stability hides growing risks to the Swiss economy. The SNB is prepared to take action if necessary, including possible changes to its policy rate and currency interventions.

Impact of US Tariffs on Swiss Economy

Concerns about US tariffs are significant, as pharmaceutical products have accounted for over 45% of Switzerland’s total exports in recent years. Recent data shows inflation in Switzerland rose to 1.8% in September 2025. The SNB now faces the challenge of managing a possible economic slowdown while keeping inflation under the 2% mark. This conflict creates a good environment for derivative strategies. The current stability of the USD/CHF indicates that implied volatility might be low. This situation offers a chance to buy volatility through strategies like straddles or strangles. These strategies could benefit from large price movements in either direction, especially with any clear news about US tariffs in the coming weeks. For those with specific market expectations, purchasing call options on USD/CHF might be a smart choice, especially if they predict a weakening of the Swiss Franc due to confirmed tariffs. On the other hand, traders who think the tariff threat will diminish could look into put options, betting on a strengthening franc as economic worries lessen. Options provide a way to manage risk in these uncertain situations. It’s also worth noting the SNB’s history of intervening directly in the currency market, especially to weaken the franc in the early 2010s to support exporters. While recent interventions have been less frequent, a significant economic shock from tariffs could prompt the SNB to act again. This possibility highlights the importance of using options to protect against risk. Create your live VT Markets account and start trading now.

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