Switzerland’s inflation is near zero at 0.1% year-on-year, while the Swiss National Bank (SNB) keeps its policy rate at 0.00%. The SNB is monitoring the Swiss franc (CHF) as safe-haven demand can push it higher.
Swiss consumers have lower exposure to energy price rises than those in the euro area because energy is a smaller part of the consumer price index (CPI) basket. Energy accounts for 5% of Swiss CPI versus 9% in the euro area, and Swiss electricity supply relies heavily on hydropower.
Imported fossil fuels still matter for Switzerland’s industrial sector. Even so, the CPI structure and electricity generation mix can limit how higher oil and gas prices feed into inflation.
CHF appreciation can increase the risk of deflation by lowering import prices. The SNB’s main options are foreign exchange market intervention or a move to a negative policy rate.
The SNB has said it is increasingly prepared to intervene in the foreign exchange market. It has also indicated that a return to negative rates faces a high bar.
Looking back at the analysis from 2025, we can see the primary concern was the Swiss National Bank’s readiness to fight against a strengthening franc due to safe-haven demand. The core issue of near-zero inflation meant the SNB had a clear reason to intervene in currency markets. This dovish stance, favouring intervention over a return to negative rates, set a distinct tone for the market.
As of early March 2026, this fundamental picture has not changed much, only intensified. The latest data from February showed Swiss inflation at just 0.6%, which, while higher than last year, remains far below the SNB’s target and significantly lower than the Eurozone’s recent 2.4% figure. This persistent inflation gap reinforces the view that the SNB will maintain its policy rate at 0.00% and continue to see any significant CHF appreciation as unwelcome.
The EUR/CHF exchange rate has recently tested the 0.9450 level, a low not seen since the brief dip in late 2025, driven by renewed market volatility. We saw the SNB’s sight deposits increase in February 2026, a classic indicator that they were actively buying foreign currency to weaken the franc, just as they hinted they would. This confirms their verbal commitments from last year are now being put into practice, creating a soft floor for the currency pair.
For derivatives traders, this suggests a clear opportunity in the coming weeks to position against further significant CHF strength. Selling out-of-the-money EUR/CHF puts or implementing put spreads could be an effective strategy to collect premium, based on the belief the SNB will defend levels below 0.9400. The implied volatility on these options may offer attractive selling opportunities, as the market prices in the central bank’s intervention risk.
Alternatively, buying short-dated EUR/CHF call options provides a direct, limited-risk way to profit from a potential sharp rebound triggered by more aggressive SNB intervention. Given the SNB’s clear communication, any move lower in EUR/CHF will likely be met with resistance, making bullish strategies on the pair compelling. This approach bets on the central bank’s credibility and its repeated actions to cap the franc’s appreciation.
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