- Medium-term inflation pressure is basically unchanged
- Iran war could increase pressure on the Swiss Franc
- There’s an increased willingness to intervene in FX
- I expect growth revival in the medium-term
SNB’s Chairman Martin Schlegel struck a cautious but relatively balanced tone, arguing that while the US-Iran conflict and the resulting surge in energy prices are creating near-term inflation risks, medium-term inflation pressures in Switzerland remain largely unchanged.
Schlegel noted that higher energy prices are likely to lift Swiss inflation in coming quarters, but emphasized that the broader inflation outlook remains contained. The SNB’s latest projections continue to show inflation remaining within its price stability range over the forecast horizon, with average inflation expected around 0.5% in both 2026 and 2027. Switzerland’s relatively low inflation environment and the strength of the Swiss franc help offset part of the imported inflation stemming from higher oil prices.
A key theme of Schlegel’s remarks was the growing importance of the exchange rate. The Swiss franc has benefited from increased safe-haven demand amid geopolitical tensions in the Middle East, creating upward pressure on the currency. The SNB has repeatedly warned that excessive franc appreciation could tighten monetary conditions, depress imported inflation too aggressively, and weigh on Swiss exporters. As a result, Schlegel reiterated that the central bank has an elevated willingness to intervene in foreign exchange markets if necessary to prevent a rapid and excessive rise in the franc.
The comments are particularly significant given that the SNB’s policy rate already stands at 0%, leaving limited room for conventional monetary easing. Policymakers have increasingly signaled that currency intervention is their preferred tool for managing franc strength rather than a return to deeply negative interest rates. Recent statements from Schlegel suggest the threshold for FX intervention has been lowered.
On growth, Schlegel maintained a cautiously constructive outlook, stating that Switzerland could see a revival in economic activity over the medium term despite near-term headwinds. The SNB expects growth to remain subdued initially as higher energy costs and global uncertainty weigh on demand, but forecasts point to an improvement in 2027 as monetary conditions remain supportive and external demand gradually recovers
