Swiss National Bank Reports Loss

The Swiss National Bank (SNB) recently reported a loss of 3.2 billion Swiss francs ($3.62 billion) for the second year in a row, attributing it to tight monetary policy. This figure was in line with initial estimates from January and marked a significant decrease from the CHF132.5 billion loss reported in 2022.

Key Factors Contributing to the Loss

The main factor contributing to the loss was the CHF8.5 billion in losses from Swiss-franc positions, primarily due to interest payments on deposits. This was a result of the SNB increasing its key interest rate twice during 2023. However, the SNB did see a profit of CHF4.0 billion from its foreign-currency positions, a stark contrast to the CHF131.5 billion loss recorded the previous year related to market downturns in 2022.

Gold Holdings and Operating Expenses

The value of gold holdings increased by CHF1.7 billion, while operating expenses totaled around CHF400 million.

No Payout to Swiss State and Cantons

Due to the reported loss, the SNB will not be making any payouts to the Swiss state and regional cantons.

Future Rate Adjustments

Following an increase from -0.75% in 2022 to the current 1.75%, Switzerland’s key interest rate is expected to decrease later this year. Some economists predict that the SNB might implement interest rate cuts as early as this month. Additionally, Swiss annual inflation dropped to 1.2% in February, down from 1.3% in January, remaining well within the central bank’s target range of 0-2%.

Chairman’s Departure

In a surprising move, SNB Chairman Thomas Jordan announced last week that he would be stepping down at the end of September.