The Chairman of the Swiss National Bank (SNB), Martin Schlegel, anticipates a slight rise in inflation in the coming quarters. Global growth is currently being impacted by US tariffs.

Interest rates are expected to stay unchanged for a considerable period. The possibility of reverting to a negative interest rate policy is quite low according to Schlegel.

Stability In The Currency Pair

The USD/CHF currency pair has stabilised around 0.8100, a level last observed over two months ago. The SNB’s policy decisions are aimed at maintaining medium and long-term price stability, defining this as a Swiss Consumer Price Index rise of less than 2% per year.

Interest rate adjustments are determined by the SNB’s price stability objective. When inflation forecasts exceed this target, a rate increase can make the Swiss Franc more appealing due to improved yields.

The SNB intervenes in the foreign exchange market to prevent excessive appreciation of the Swiss Franc. Interventions usually involve purchasing foreign currencies to maintain competitiveness for Swiss exports.

The SNB Governing Council conducts monetary policy assessments quarterly. Decisions are made during meetings in March, June, September, and December, accompanied by medium-term inflation forecasts.

Volatility And Derivative Trading Strategy

We see the Swiss National Bank signaling that interest rates will likely remain unchanged for a long time. While they expect inflation to pick up in the coming quarters, the message is that the bar for a rate hike is high. With the policy rate holding steady at 1.50% since the September 2025 meeting, we should not expect any sudden moves before their next decision in December.

This stable interest rate environment suggests that volatility in the Swiss Franc could remain low. We’ve seen 3-month implied volatility on USD/CHF options fall below 5.5%, which is near the lowest levels we have seen since before the rate hiking cycle of 2022-2023. This points towards range-bound trading, likely keeping the pair between 0.8000 and 0.8250 in the near term.

For derivative traders, this outlook makes selling volatility an attractive strategy. With the SNB on the sidelines, collecting premium through short straddles or strangles on currency pairs like USD/CHF and EUR/CHF could be profitable. These positions benefit from the passage of time and the expected lack of any major directional breakout.

The main risk to this view is a surprise jump in inflation, which would force the SNB to reconsider its stance. While the latest October 2025 CPI reading came in at a manageable 1.7%, we remember how quickly inflation accelerated back in 2022. Any data suggesting a move above the 2% target could unwind these short volatility positions very quickly.

We also need to watch the global growth picture, especially with ongoing US tariff discussions. A significant slowdown, evidenced by recent weak manufacturing PMI data from Germany, could trigger a flight to safety. In the past, such events have caused rapid strengthening of the Swiss Franc, which would challenge the view of a stable range for USD/CHF.

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