Swiss inflation remained near zero in February, raising concerns for the Swiss National Bank (SNB). According to Jin10, the SNB has previously expressed a preference for intervening in the foreign exchange market to curb the recent appreciation of the Swiss franc. Data from the Swiss Statistics Office on Wednesday showed that the Consumer Price Index rose by 0.1% year-on-year in February, matching January's increase.
Over the past year, the SNB has struggled to limit the franc's appreciation as investors sought safe-haven assets amid the turbulence caused by U.S. President Donald Trump's tariff hikes and changes in foreign policy. Last weekend's military action against Iran further increased demand for safe-haven assets, pushing the franc to its highest level against the euro in over a decade on Monday.
The SNB aims for inflation above 0% but below 2%. Bank officials are concerned about the potential for a deflationary cycle, where persistent price declines might lead businesses and households to delay consumption and investment, anticipating lower future prices. This could weaken economic activity and further depress prices, creating a vicious cycle.