SNB Held Off on FX Interventions After Trump Won Election
(Bloomberg) — The Swiss National Bank largely kept out of currency markets in the final three months of 2024, marking a full year without sizeable interventions in the franc as officials focused on interest rates to steer monetary conditions.
Switzerland’s central bank purchased foreign exchange worth about 100 million francs ($113 million) from October to December, according to Bloomberg calculations based on full-year SNB data released on Tuesday.
During the period, the franc stayed roughly flat against the euro. While it rose after Donald Trump’s election on Nov. 5, it erased the gains later. It has weakened since the start of 2025, thanks in part to the jumbo cut and the prospect of more government spending by Germany, which pushed up the common currency.
The central-bank’s fourth-quarter intervention constraint is in line with expectations that the SNB will only start buying foreign currencies — and thereby weakening the franc — after exhausting its room to lower interest rates. Officials haven’t ruled out stepping into markets but regularly say that rates are their main policy tool.
Swiss borrowing costs are in focus this week, with economists predicting policymakers will deliver a quarter-point reduction on Thursday despite developments which could speak in favor of leaving borrowing costs unchanged. At its last meeting in December, officials surprised with a half-point move.
Weak inflation is the main reason that economists see a cut, and new government forecasts published Tuesday show why. Consumer-price growth is seen at just 0.3% this year and 0.6% in 2026 — below the SNB’s most recent prediction of 0.8%. The State Secretariat for Economic Affairs also slightly trimmed its forecast for the economy, predicting expansion of 1.4% in 2025, with a mild acceleration thereafter.
“The uncertainty surrounding international economic and trade policy and their macroeconomic consequences remains exceptionally high,” SECO said. “The current forecast assumes that there will be no escalating global trade war. However, more extreme scenarios remain possible.”
Manipulator Threat
For all of 2024, the SNB purchased 1.2 billion francs worth of foreign currency, it said in its annual report. That compares with sales of 132.9 billion francs the previous year.
The central bank only publishes data with a three-month delay, so the first-quarter tally showing whether the SNB continued its purchases won’t be revealed until June.
By selling some of its own reserves in foreign denominations, the central bank can strengthen the exchange rate. In 2022 and 2023, it boosted the franc in this way to dampen domestic inflation by making imported goods cheaper.
For several years before that, it had used the mechanism in the opposite direction to keep a lid on the currency. This has seen the SNB’s balance sheet grow to a size some observers deem dangerous as it can yield large profits — as last year — but also large losses.
The SNB’s past interventions earned Switzerland a currency manipulator tag during Trump’s first term, though that label was subsequently removed. SNB President Martin Schlegel has said that the threat of that classification won’t stop the institution from steering the currency if required.
Currently, officials refuse to comment on whether the franc is over- or undervalued. The institution maintains that the interest rate is its main tool, but that currency interventions can happen in both directions.
(Updates with government forecasts starting in sixth paragraph)
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