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 lower and squeezing Swiss exporters.

Why Swiss inflation stays stubbornly low

Tschudin addressed the other side of the equation too: why Switzerland’s inflation remains so subdued compared to peers. Two factors stand out.

First, inflation expectations among households and businesses in Switzerland are anchored at low levels. When people don’t expect prices to rise much, they don’t demand higher wages or rush to buy goods ahead of anticipated increases.

Second, oil plays a relatively small role in Switzerland’s inflation basket. Energy price swings that send headline inflation soaring in other countries produce only a muted effect in Switzerland.

The SNB revised its inflation forecasts at the June 2026 press conference. The bank now projects inflation will average 0.6% across 2026 and 2027, ticking up slightly to 0.7% in 2028. Those numbers sit comfortably within the SNB’s definition of price stability, which it defines as annual CPI increases below 2%.

Tschudin joined the Governing Board on October 1, 2024, heading Department III. Her comments represent the continuation of a consistent SNB framework: use the policy rate as the primary tool, keep intervention as a backup, and let the franc absorb some of the adjustment that might otherwise require more aggressive domestic policy changes.

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