Switzerland’s April CPI data was mixed. Headline CPI was 0.6% year on year, matching consensus and up from 0.3% in March due to higher energy prices, and it was the highest since Q4 2024.
Headline inflation was near the Swiss National Bank’s Q2 projection of 0.5%. Core CPI fell to 0.3% year on year, below the 0.5% consensus and down from 0.4% in March, reaching a multi-year low.
The report links softer underlying inflation to expectations that the SNB can keep rates unchanged. It also notes that market pricing for a 25bps rate rise to 0.25% by year-end may ease.
The Swiss Franc is described as supported by safe-haven demand, which may offset reduced expectations for tighter SNB policy.
Last year, we saw a similar situation where low underlying inflation in Switzerland suggested the central bank could keep rates steady. The view back in 2025 was that the franc’s safe-haven status would be a more powerful driver than soft interest rate expectations. This dynamic appears to be playing out again now with even greater clarity.
The Swiss National Bank has since acted on that benign inflation, cutting its policy rate to 1.25% in a move that continues to separate it from other central banks. While Swiss headline inflation for April 2026 ticked up to 1.4%, it remains one of the lowest rates among developed economies, giving the SNB little reason to reverse its course. This reinforces the idea that interest rates are not the primary driver for the franc at this moment.
Instead, persistent geopolitical tensions and recent volatility in global equity markets have significantly increased demand for stable assets. We are seeing this directly in the EUR/CHF pair, which has consistently tested levels below 0.97 despite the widening interest rate gap favouring the euro. The market’s risk-off sentiment is providing a steady bid for the franc that is overriding monetary policy.
For derivative traders, this environment suggests that betting on franc strength remains the prudent path. Selling out-of-the-money EUR/CHF call options could be an effective strategy to collect premium, capitalizing on the view that the franc’s safe-haven appeal will cap any significant upside for the pair. This approach benefits from both franc strength and sideways price action in the coming weeks.
