Swiss central bank readies for FX intervention if safe haven franc strengthens

The Swiss National Bank (SNB) in Bern, Switzerland, on Thursday, Dec. 12, 2024. Stefan Wermuth | Bloomberg | Getty Images The Swiss National Bank said on Thursday it is ready to intervene in foreign exchange markets if a rebound in demand for the safe-haven franc drives the currency higher. It came as the central bank left its main policy rate unchanged at 0%, in a move widely expected by markets, keeping borrowing costs well below those seen in other major economies. In a statement, Martin Schlegel, chairman of the SNB's Governing Board, said the outbreak of the Middle East conflict on Feb. 28 initially heaped upward pressure on the Swiss franc, as investors sought out its safe-haven status. That pressure has since eased, but the SNB still faces a tricky policy balance — and Schlegel said the central bank remains willing to act against any "rapid and excessive appreciation" of the franc, which would jeopardize economic stability. Announcing its rates decision Thursday, the SNB said inflation in Switzerland has ticked higher since its last monetary policy assessment — albeit relatively low by global levels — increasing to 0.6% in May from 0.1% in February, due to higher energy prices resulting from the Iran conflict. Stock Chart Icon Stock chart icon Swiss franc. But the central bank said medium-term inflationary pressure was virtually unchanged over that period. …