The Swiss National Bank (SNB) significantly scaled back its foreign currency market activity in 2024, focusing instead on interest rates to guide monetary policy.
According to data released on Tuesday, the SNB purchased foreign currency worth 1.2 billion Swiss francs ($1.4 billion) throughout the year, with acquisitions slowing considerably in the fourth quarter. The central bank bought only 88 million francs’ worth of foreign currency in the last three months, compared to 1.11 billion francs during the previous nine months.
The shift marks a sharp contrast to 2023 when the SNB sold 132.9 billion Swiss francs of foreign currencies to strengthen the franc and curb inflation. In December 2023, the SNB announced that foreign currency sales were no longer a key focus, shifting to interest rate adjustments as its primary monetary policy tool.
This approach proved effective, keeping Swiss inflation at 1.1% in 2024, within the central bank’s target range of 0-2%. Over the year, the SNB cut interest rates at all four of its meetings, bringing them down from 1.75% in January to 0.5% by December.
The SNB’s next policy meeting is scheduled for Thursday, with market expectations of a further 25-basis-point rate cut.
