The SNB stated that it is “if necessary, more willing to intervene in the foreign exchange market to counter any rapid and excessive appreciation of the Swiss franc that could threaten price stability in Switzerland.” Each element of this statement matters.
First, the SNB is signalling a willingness to intervene in FX markets, but only to counter franc appreciation. This is not a repeat of the 2022 strategy, when the SNB sold foreign exchange reserves to strengthen the franc in order to curb inflation. The current stance implies action only if the franc becomes too strong.
The Swiss franc has indeed appreciated in effective terms over the past 12 months. However, pressures have eased since early March, when the SNB made clear that it stood ready to move more actively in FX markets. More importantly, in real effective terms, the franc has not become more expensive, thanks to lower inflation in Switzerland compared with other economies. This is the metric the SNB monitors most closely. We expect Swiss inflation to remain persistently below that of its peers in the coming months, which should help contain concerns about excessive franc strength in real effective terms.
In addition, interventions are explicitly framed as targeting rapid and excessive appreciation. This suggests that the SNB does not intend to intervene continuously, but only during periods of market stress, as seen in early March. The addition of “if necessary,” compared with the March communication, further reinforces that FX intervention is not a tool used on a permanent basis. In our view, systematic intervention is unlikely, but the SNB will not hesitate to step in during episodes of market tension.
Finally, intervention is conditional on risks to price stability. In practice, this means the SNB would act only if an overly strong franc were to risk pushing imported inflation sharply lower and generating deflationary pressures. Given the current inflation outlook, this risk appears limited, reducing the immediate need for intervention.