SNB Generation Change Keeps Policy Steady, Says Board Member

Maintaining Price Stability

Tschudin reiterated that ensuring price stability remains the SNB’s top priority, with an inflation target set between 0% and 2% on an annual basis. The bank continues to rely on a robust "toolbox" of monetary policy instruments, including foreign currency purchases or sales, to achieve this goal. Even if inflation briefly strays outside this range, Tschudin noted that what matters most is that it aligns with the medium-term target.

Future Rate Cuts and Negative Interest Rates

Market expectations are now leaning towards further interest rate cuts from the current 0.5% level at the SNB’s upcoming meeting on March 18, following Swiss inflation’s decline to 0.4% in January—the lowest level since April 2021. Tschudin pointed out that while negative interest rates were used by the SNB from December 2014 until September 2022, they remain a critical policy tool for a small, open economy like Switzerland. Although Chairman Schlegel recently expressed a preference to avoid reintroducing negative rates, he did not rule out the possibility. Negative rates, Tschudin explained, are valuable in managing the interest rate differential, especially in a low-rate environment, as they can help curb excessive appreciation of the Swiss franc—thus supporting competitiveness by keeping imports affordable and exports competitive.

Conclusion

Despite a generational change at the helm, the Swiss National Bank remains firmly committed to its established monetary policy framework, focusing on price stability and retaining a versatile range of instruments—including the potential use of negative interest rates—to navigate a challenging economic landscape.