Swiss National Bank’s Tschudin explains franc weakness as foreign rate expectations shift

Petra Tschudin, one of the newer members of the Swiss National Bank’s Governing Board, has laid out the central bank’s reading of why the Swiss franc has been losing ground: it’s not about Switzerland, it’s about everyone else. According to Tschudin, the franc’s recent weakness stems primarily from higher interest rate expectations abroad. When foreign central banks are expected to keep rates elevated, the yield gap between Swiss assets and foreign alternatives widens, making the franc less attractive to hold. The SNB’s balancing act at 0% The SNB held its policy rate at 0% during its June 2026 monetary policy assessment, a level that leaves almost no room for conventional easing. That decision came alongside a notable observation: the franc’s depreciation since March 2026 has itself contributed to looser monetary conditions in Switzerland. But Tschudin also made clear the SNB isn’t just watching passively. The board remains prepared to intervene directly in foreign exchange markets if the franc moves too far, too fast in either direction. The particular concern flagged was rapid or excessive appreciation, the kind that could threaten price stability by dragging inflation even lowe...