🇨🇭 Swiss National Bank: No Quick Return to Negative Interest Rates

Swiss National Bank (SNB) Governor Martin Schlegel said on Monday that the chances of cutting interest rates back into negative territory are very low.

Speaking to Bloomberg, he explained that negative rates bring risks, especially for savers and pension funds, making it an option the SNB does not want to use unless absolutely necessary.

🔑 Key Points from Schlegel

• Negative interest rates can hurt savers and pension funds.

• The bar to bring them back is very high.

• Policy action should not be delayed too long, otherwise stronger measures may be needed later.

💱 Why It Matters for Forex Traders

1. Impact on CHF Pairs:
   The Swiss franc (CHF) is often seen as a safe-haven currency. If the SNB avoids negative rates, the CHF may remain relatively strong compared to currencies from countries with looser monetary policy.

2. Rate Differentials:
   Forex traders closely watch the interest rate gap between Switzerland, the U.S. Federal Reserve, and the European Central Bank. If the Fed keeps rates high while SNB avoids cuts, USD/CHF may stay supported, but sudden risk-off sentiment could still push CHF higher.

3. Market Expectations:
   Traders speculating on a return to negative rates should now adjust their strategies. The SNB has made it clear: negative rates are a last resort and not a base-case scenario.

4. Safe-Haven Flows:
   In times of global uncertainty, CHF demand could rise, even without negative rates. For example, geopolitical tensions or equity market selloffs often drive investors toward the franc.

📊 Trading Takeaway

• CHF remains sensitive to global risk sentiment.

• Watch for Fed and ECB decisions, as they create interest rate spreads that move CHF pairs.

• The SNB’s firm stance against negative rates suggests limited downside for the franc in the medium term.

✍️ By Md Golam Rabbani