The Swiss National Bank held its policy rate at 0% on Thursday and raised its inflation forecasts on higher oil prices and a weaker franc. USD/CHF traded higher on the day, while the SNB softened its language on currency intervention and traders price growing odds of a hike within the next year.
The Swiss National Bank left its policy rate unchanged at 0% on Thursday, matching expectations, but it softened the wording it uses to describe its currency stance. The central bank now says it stands ready to intervene in the foreign exchange market as necessary, a step back from the stronger intervention language it used in June.
Franc weakness lifts EUR/CHF and USD/CHF
The shift in language came as the franc weakened by about 3% against the euro since the June meeting, easing the currency-strength problem that had pushed the SNB toward heavier intervention talk earlier this year. EUR/CHF rose from 0.9380 to 0.9420 on the day. USD/CHF also firmed, trading at 0.8268, up 0.206% on the day the decision was announced.
Inflation forecasts revised higher
The SNB raised its conditional inflation path across the horizon. It now expects average inflation of 0.7% in 2026, 0.8% in 2027 and 0.8% in 2028, up from 0.6%, 0.6% and 0.7% in June. Swiss CPI rose from 0.6% in May to 0.8% in August, driven mainly by oil-product prices, while goods inflation turned positive for the first time since May 2024.
Still, the SNB expects energy inflation to fade during 2027 and said medium-term inflation pressure had increased only slightly. It also projected 2026 GDP growth of 1.5% to 2.0% and around 1.5% growth in 2027.
Markets price a 2027 hike
Even so, traders are not convinced the SNB can hold at zero indefinitely. Markets price roughly even odds of a December rate hike and put the chance of a move by early 2027 above 90%, according to CNBC. LSEG data cited by CNBC shows traders betting the SNB's rate rises to at least 0.75% by next September.
The franc's safe-haven appeal has cut both ways for the SNB. The currency rose more than 12% against the dollar in 2025 as investors sought shelter from market volatility, but the dollar has since clawed back around 4% against the franc this year.
Sources: Investinglive, CNBC, ActionForex
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