Franc Down 3% Since June (24 September 2026): The SNB Held at 0% and Dropped Its Warning About a Strong Franc
The SNB held at 0% on 24 September and dropped its pledge to fight franc strength after a 3% trade-weighted fall since June. What changed, and the channel.
Franc Down 3% Since June (24 September 2026): The SNB Held at 0% and Dropped Its Warning About a Strong Franc
The Swiss National Bank held its policy rate at 0% on Thursday 24 September, as every economist in the Reuters poll expected. The change came in the currency language. In June the SNB said it had an "increased willingness" to intervene against a "rapid and excessive appreciation" of the franc. That clause is gone. Chairman Martin Schlegel told the news conference the franc has fallen around 3% on a trade-weighted basis since June, "in line with the widening of interest rate differentials." A pledge written to stop a rising currency has nothing to do while the currency falls, so the SNB replaced it with a line that allows intervention in either direction.
- Policy rate unchanged at 0%, where it has been since June 2025. The discount on sight deposits above the threshold stays at 0.25 percentage points.
- The hold was fully priced. All economists in the Reuters poll expected it, and markets gave a hold a 94% probability.
- The intervention wording changed direction. June: an "increased willingness to intervene" to counter a strong franc. September: willing to be active "as necessary to ensure appropriate monetary conditions." There is no longer any mention of appreciation.
- The franc is about 3% weaker since June on a trade-weighted basis. The SNB attributes this to rate differentials after the ECB (to 2.50%) and the Fed (to 3.75–4.00%) both hiked.
- The inflation forecast rose in every year to 0.7% / 0.8% / 0.8% for 2026–28, from 0.6% / 0.6% / 0.7%. It is still inside the 0–2% range, which is why no hike was needed.
- The 2026 growth forecast almost doubled, from around 1% to between 1.5% and 2%.
- See how the interest-rate factor is scoring the franc against the other seven majors on the live meter.
What actually happened
The SNB's press release opens with the decision that was already priced: "The Swiss National Bank is leaving the SNB policy rate unchanged at 0%." Sight deposits are paid the policy rate up to a threshold, and the 0.25-point discount above it is unchanged. The central bank's own reasoning is short: inflation "has risen further since June, primarily due to higher energy prices," while "medium-term inflationary pressure has increased only slightly."
Swiss inflation was 0.8% in August, up from 0.6% in May. Goods inflation turned positive in August for the first time since May 2024, driven mainly by oil products. That is the energy shock that pushed the ECB, the Federal Reserve and the Bank of Japan into hiking this month. In Switzerland it has not come close to the top of the range. As RTÉ reported, citing Reuters, the policy rate had been forecast "by all economists polled by Reuters, as well as markets, which gave a 94% probability for no change."
If the rate was fully priced, the useful information had to be somewhere else. It was in one sentence about the currency.
The sentence that changed
Put the two statements side by side:
| 18 June 2026 | 24 September 2026 | |
|---|---|---|
| Policy rate | 0% | 0% |
| FX language | "an increased willingness to intervene in the foreign exchange market" | "willing to be active in the foreign exchange market as necessary" |
| Stated purpose | "counters a rapid and excessive appreciation of the Swiss franc" | "to ensure appropriate monetary conditions" |
| Inflation forecast 2026 / 2027 / 2028 | 0.6% / 0.6% / 0.7% | 0.7% / 0.8% / 0.8% |
| GDP growth 2026 | around 1% | between 1.5% and 2% |
| Named upside risk to the franc | "upward pressure on the Swiss franc could also increase again" | none. "Exchange rate developments" listed as a source of uncertainty |
Source: SNB press releases of 18 June and 24 September 2026.
Three things were removed together: the word "increased", the direction ("appreciation"), and the risk paragraph warning that upward pressure on the franc could return. A central bank that says it is more willing to sell its currency is telling the market which side it will lean on. A central bank that says it is willing to be "active" to keep conditions appropriate has committed to nothing in particular. In principle the new wording covers buying francs as well as selling them, although the SNB did not say it expects to do either.
Why the franc fell: a 0% rate beside two hikes
Schlegel gave the explanation in his introductory remarks: "Since our last assessment, the Swiss franc has depreciated by around 3% on a trade-weighted basis. This depreciation was in line with the widening of interest rate differentials between the major currency areas and Switzerland." He added that longer-term Swiss rates "have risen somewhat," but "have not increased as strongly as in the major currency areas."
The differential is easy to read. The European Central Bank lifted its deposit facility to 2.50% effective 16 September (covered in our ECB September decision post). The Federal Reserve raised to 3.75–4.00% on 16 September, and the Bank of Japan to around 1.25% two days later (both in our three rate decisions note). The SNB is now the only one of those four still at zero.
The franc drifts because of what holding it costs. When euro and dollar deposits pay more while franc deposits still pay nothing, an investor holding francs gives up that interest income. The franc's safe-haven demand does not disappear, but it has to outweigh a larger opportunity cost than before. Wider differentials therefore tend to produce a slow depreciation, not a single move on decision day. That matches the market's response on Thursday: RTÉ reported the franc "roughly flat against the euro at 0.9395 francs and at 0.8247 francs against the US dollar."
That framing also answers the question in our July note, why the dollar has been beating the franc as a safe haven. If both currencies attract safe-haven demand, the one that also pays interest has the advantage.
Why a weaker franc raises the forecast, and why that matters next
A central bank that spent years resisting franc strength might be expected to welcome franc weakness. Up to a point, it does. Board member Petra Tschudin said "the recent depreciation of the Swiss franc" is supporting growth, and the 2026 growth forecast rose from around 1% to between 1.5% and 2%. The SNB said the upgrade mainly reflects revised 2025 data and an exceptionally strong second quarter, which pharmaceuticals output inflated.
The same depreciation also appears in the inflation forecast. The SNB said the medium-term revision reflects, "among other things, the weakening of the Swiss franc." Imports priced in euros and dollars cost more in francs, and a small, open economy passes that through to consumer prices. The mechanism that kept Swiss inflation at 0.8% while the euro area's ran well above target is the same one now pushing Swiss inflation up.
This is why the conditional forecast matters. It assumes a 0% policy rate throughout. While that path stays inside 0–2%, holding is justified by the SNB's own framework. If the path starts approaching 2%, holding at zero is no longer consistent with the forecast. That could happen if energy stays high or the franc keeps weakening. September's numbers (0.7%, 0.8%, 0.8%) are still well inside the range, but they rose in every year of the horizon.
What is priced, and what would change it
The SNB gave no guidance on timing. What can be reported is market pricing. CNBC reported that traders price the odds of a December hike "close to 50-50," give "more than a 90% chance the SNB will begin hiking by early 2027," and, according to LSEG data, are pricing the key rate at "at least 0.75% by next September."
That pricing means the franc's path over the next quarter depends more on the two inputs the SNB named than on the Swiss rate itself:
- Energy prices. Both the SNB and its peers describe the Middle East as the main source of uncertainty. Higher oil prices raise Swiss inflation directly and also keep the ECB and Fed hawkish, which widens the differential. Lower oil prices would reduce both pressures.
- The differential. If the ECB and the Fed stop hiking, the carry cost of holding francs stops rising, and the main driver of the depreciation Schlegel described weakens. If they keep hiking, it strengthens.
- Risk appetite. A sharp risk-off episode can still bring the old franc back quickly. That is exactly the case in which the SNB's new two-way wording lets it lean against appreciation again without first having to reverse a statement.
Economists who spoke to CNBC also explained why Switzerland can sit this far from its peers. INSEAD's Antonio Fatás said that "an interest rate at 0% and inflation around 0.8% means a real interest rate of -0.8%," close to the euro area's figure on the same arithmetic. Measured in real terms, the SNB is less of an outlier than the 0% headline suggests. What differs is the nominal gap, and the nominal gap is what an investor holding francs is paid, or not paid.
What this means for franc pairs
EUR/CHF and USD/CHF are now driven mainly by rate differentials, with safe-haven demand as a secondary factor. That reverses the pattern of 2025, when CNBC notes the franc rose more than 12% against the dollar on safe-haven buying. The greenback has since recovered around 4% of that this year. Our explainers on what drives the Swiss franc and interest rate differentials cover each channel in isolation. September is a case where the second one dominated.
Interest rates are one of the five factors the meter scores for each of the eight majors, and risk sentiment is another. The franc page shows how those two are pulling against each other, and the euro page and dollar page show the other side of the two largest franc pairs. For how the scoring framework works in general, see about the meter. The SNB's past interventions, including 2011 and 2015, are summarised in our currency intervention explainer.
The next quarterly assessment is in December, and the question for it is already clear. The SNB held at zero this time because a 0% rate still produces a forecast inside its range. December will show whether a weaker franc and higher energy prices have pushed that forecast far enough up to change the answer.
Educational macro context only — not investment advice.