Switzerland Continues Foreign Exchange Market Intervention Despite US Watch List
The Swiss National Bank's (SNB) intervention policy has not stopped, even as Washington warns of possible currency manipulation.
On Thursday, the SNB cut its official interest rate to zero, while President Martin Schlegel insisted that its monetary policy would continue with foreign exchange operations to control inflation. The US government has placed Switzerland on a watch list for alleged currency manipulation.
The SNB will intervene “to ensure price stability,” ignoring pressure from Washington over currency manipulation, Reuters reported.
The US administration has put a lot of pressure on Bern this month, with the possibility of imposing tariffs of up to 31% on trade if tensions continue to escalate. However, Mr. Schlegel stressed that the SNB’s actions are motivated by a persistent goal of controlling inflation, not an illegal competitive advantage for Swiss exporters.
SNB Cuts Interest Rates for Second Time Amid Pressure on Monetary Policy
The latest rate cut to zero, which was predicted with an 81% probability, reflects the central bank’s ability to control inflation, a market consensus that was already in place when the official announcement was made.
Schlegel told CNBC that while there are signs of short-term price declines, the current deflationary environment is not enough to warrant a change in interest rate policy. Focusing on the medium term is the central bank’s main objective.
Looking at the Forecast, the SNB revised down its Inflation Forecast for 2025 to 0.2%, and projected 0.5% for 2026. The Bank stressed that international developments are the biggest risk to the economic outlook.
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Analysts say the Swiss franc has been strengthening amid global geopolitical tensions, putting downward pressure on import prices and boosting the consumer price index (CPI). So, for an import-dependent economy, despite falling inflation, there are still many challenges.
To control the franc's rise, the SNB has maintained its interest rate policy below the international average. After the cut, the dollar maintained its value against the franc, demonstrating the persistence of its tight monetary policy.
SNB's Tightening Policy Reinforced by Capital-Boosting Rules for UBS
The Swiss money manager also supports new rules to strengthen the position of the country’s largest bank, UBS. Chairman Martin supports a rule requiring UBS to hold an additional $26 billion in equity capital to ensure the bank’s stability and liquidity.
He also recalled previous discussions with US officials when Switzerland was placed on the watch list, confirming that this was only a stepping stone for further dialogue, aimed at protecting national interests.
As global central banks face inflationary pressures, the SNB faces the opposite challenge — controlling deflation. And despite opposition from the United States and international analysts, the SNB remains steadfast in using every tool at its disposal to maintain the stability of the national crypto economy.
Source: https://tintucbitcoin.com/tiengiay-dien-tu-thuy-si-vuot-kho-my/
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