EUR/CHF slips as Franc strengthens after SNB holds rates at 0%

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The Euro (EUR) edges lower against the Swiss Franc (CHF) on Thursday as the CHF strengthens in the aftermath of the latest Swiss National Bank (SNB) interest rate decision.

EUR/CHF extends losses for a third straight day as the Swiss Franc strengthens following the SNB’s latest policy decision.
SNB keeps the policy rate unchanged at 0%, in line with expectations, maintaining a cautious but steady policy stance.
Focus shifts to next week’s ECB meeting, where policymakers are widely expected to keep all key rates unchanged.

The Euro (EUR) edges lower against the Swiss Franc (CHF) on Thursday as the CHF strengthens in the aftermath of the latest Swiss National Bank (SNB) interest rate decision. At the time of writing, EUR/CHF is trading around 0.9330, extending losses for the third straight day as traders respond to the SNB’s cautious but steady policy tone.

The SNB left the policy rate unchanged at 0%, in line with expectations. Policymakers reiterated that the central bank remains ready to intervene in foreign exchange markets if needed, while emphasising that the current low rate environment helps maintain price stability and support economic activity. The central bank noted that inflationary pressure remains virtually unchanged compared with the previous assessment.

In its updated projections, the SNB said inflation dipped to 0.0% in November, down from 0.2% in August. However, the medium-term outlook remains stable, with the SNB forecasting average inflation of 0.2% in 2025, 0.3% in 2026, and 0.6% in 2027, assuming the policy rate stays at 0% over the entire forecast horizon.

On the domestic front, Switzerland’s economy contracted in the third quarter. Even so, the economic outlook has improved modestly on slightly better global conditions, with Gross Domestic Product (GDP) expected to expand by just under 1.5% in 2025 and around 1% in 2026.

During the post-meeting press conference, SNB Chairman Martin Schlegel said the bank’s monetary stance will remain expansive, adding that policy is expected to “stoke inflation slowly in the next quarters.” He reiterated that the SNB is willing to introduce negative rates if needed, noting that negative rates in the past helped reduce the attractiveness of the Franc.

At the same time, he stressed that the probability of returning to negative rates has not increased and that the hurdle for using them is now higher. Schlegel also underlined that the SNB has no preference for inflation as long as it remains within its target range, and noted that while the unemployment rate is expected to rise slightly, it could fall again further ahead.

Looking ahead, attention now turns to next week’s European Central Bank (ECB) interest rate decision. The ECB is widely expected to keep all three key policy rates unchanged, with speculation building around the possibility of a rate hike next year following a series of firmer remarks from policymakers this week.

SNB FAQs

What is the Swiss National Bank?

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.

How does the Swiss National Bank interest-rate policy affect the Swiss Franc?

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.

Does the Swiss National Bank intervene in the forex market?

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.

When does the Swiss National Bank Governing Council decide on monetary policy?

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.