Swiss National Bank (SNB) and Swiss Franc Trends

■ The Swiss National Bank is expected to return to a zero-interest rate policy in June and likely implement a negative interest rate policy later this year. 

■ However, due to its relationship with the United States and the attention paid to the Swiss franc as a "safe haven currency," it is difficult for the Swiss National Bank to induce the Swiss franc to depreciate.  

    This article will focus on the trends of the Swiss National Bank (SNB) and the Swiss franc (CHF) from two aspects: (1) the likelihood of restarting the negative interest rate policy, and (2) the environment surrounding the CHF. 
 

    (1) The Swiss National Bank will probably lower the policy rate to 0% at the monetary policy meeting scheduled for June 19. Some opinions also predict it may be further reduced to negative interest rates. Since taking office in November last year, SNB President Schlegel has mentioned the possibility of a negative interest rate policy several times, reiterating this view on May 6 and 16. Additionally, the SNB Director stated on April 3 that negative interest rates are actually an effective means if they help achieve price stability. Against this backdrop, Swiss prices have continued to slow. The Consumer Price Index (CPI) for May, released on June 3, showed an overall year-on-year decline of 0.1%, marking the first time it has fallen below the SNB's price target range (0%-2%) since March 2021. Based on the relevant speeches from the central bank's top officials and the price trend, it is expected that the possibility of entering a negative interest rate policy phase is high before the end of this year. 
 

    (2) Despite the SNB's continued interest rate cuts, the Swiss franc remained strong in 2025, rising 9.6% against the US dollar and 0.9% against the Japanese yen as of June 11. It is worth noting that despite the policy interest rate reversal in March this year (the Japanese yen interest rate was 0.50%, while Switzerland lowered it to 0.25%), the Swiss franc still appreciated against the Japanese yen. Since the United States announced "mutual tariffs" on April 2, the Swiss franc's appreciation momentum has significantly increased. This illustrates that since 2025, the Swiss franc's characteristics as a "safe haven currency" have attracted more attention compared to its attributes as a "low-interest rate currency." In this context, the US government once again included Switzerland in the "Watch List" in the "Foreign Exchange Policy Report" released on June 5, citing its large trade surplus and current account surplus with the United States. 

    According to the current situation, it will be challenging for the Swiss National Bank to induce the Swiss franc to depreciate. Being re-included in the "Watch List" under the tariff negotiations with the United States means that it is more difficult for the SNB to conduct foreign exchange intervention. At the same time, even if the Swiss franc is induced to depreciate by lowering interest rates, the financial market's current focus is still on its "safe haven currency" attribute. Considering that the Swiss franc has been depreciating against the euro since June, and the SNB has been attentive to the exchange rate, it seems unlikely that the SNB will significantly cut interest rates at the June monetary policy meeting. Even if it attempts to create a surprise by cutting interest rates by 0.50%, it remains challenging for the Swiss franc to shift to a depreciation trend. Although the tariff negotiations between the United States and Switzerland still need monitoring, it is anticipated that the Swiss franc will remain strong against the yen and the US dollar in the short term.