Current Monetary Policy Stance
The Reserve Bank of Australia (RBA) lowered its cash rate by 25 basis points to 4.10% in February 2025, marking the first cut since 2020.
The RBA paused further easing in April, maintaining the rate at 4.10% and adopting a cautious, data-dependent approach.
The RBA’s policy remains restrictive, but with inflation easing and private demand sluggish, further gradual rate cuts are anticipated through 2025.
Switzerland (SNB):
The Swiss National Bank (SNB) cut its policy rate by 25 basis points to 0.25% in March 2025, responding to increased downside risks to inflation.
Swiss inflation remains the lowest among G10 economies, forecast at 0.6% for 2025.
The SNB is expected to keep rates at 0.25% until at least 2026, with a low risk of returning to negative rates.
Interest Rate Differential
As of April 2025, the interest rate differential between Australia and Switzerland stands at 3.85 percentage points (Australia 4.10% minus Switzerland 0.25%).
This significant positive differential typically supports the Australian dollar, as higher yields attract capital inflows into AUD-denominated assets.
Impact on AUD/CHF Exchange Rate
Higher Australian rates relative to Switzerland generally favor AUD appreciation versus CHF, as investors seek higher returns.
However, the Swiss franc’s status as a safe-haven currency can counteract this effect during periods of global uncertainty, attracting flows into CHF regardless of the rate gap.
The RBA’s gradual easing bias and the SNB’s low, stable rates suggest the differential may narrow slightly if Australia continues to cut rates, but the gap is expected to remain wide through 2025.
Summary Table
Central Bank Policy Rate (Apr 2025) Policy Direction Inflation Outlook
RBA 4.10% Gradual easing expected Easing, within target
SNB 0.25% On hold, dovish Very low, stable
Conclusion
The monetary policy differential between Australia and Switzerland is currently wide, with Australia maintaining much higher rates than Switzerland. This supports the AUD/CHF exchange rate, but the effect is moderated by the Swiss franc’s safe-haven appeal and global risk sentiment. Future moves by the RBA to cut rates may narrow the differential, but the gap is likely to remain significant in 2025.
The Reserve Bank of Australia (RBA) lowered its cash rate by 25 basis points to 4.10% in February 2025, marking the first cut since 2020.
The RBA paused further easing in April, maintaining the rate at 4.10% and adopting a cautious, data-dependent approach.
The RBA’s policy remains restrictive, but with inflation easing and private demand sluggish, further gradual rate cuts are anticipated through 2025.
Switzerland (SNB):
The Swiss National Bank (SNB) cut its policy rate by 25 basis points to 0.25% in March 2025, responding to increased downside risks to inflation.
Swiss inflation remains the lowest among G10 economies, forecast at 0.6% for 2025.
The SNB is expected to keep rates at 0.25% until at least 2026, with a low risk of returning to negative rates.
Interest Rate Differential
As of April 2025, the interest rate differential between Australia and Switzerland stands at 3.85 percentage points (Australia 4.10% minus Switzerland 0.25%).
This significant positive differential typically supports the Australian dollar, as higher yields attract capital inflows into AUD-denominated assets.
Impact on AUD/CHF Exchange Rate
Higher Australian rates relative to Switzerland generally favor AUD appreciation versus CHF, as investors seek higher returns.
However, the Swiss franc’s status as a safe-haven currency can counteract this effect during periods of global uncertainty, attracting flows into CHF regardless of the rate gap.
The RBA’s gradual easing bias and the SNB’s low, stable rates suggest the differential may narrow slightly if Australia continues to cut rates, but the gap is expected to remain wide through 2025.
Summary Table
Central Bank Policy Rate (Apr 2025) Policy Direction Inflation Outlook
RBA 4.10% Gradual easing expected Easing, within target
SNB 0.25% On hold, dovish Very low, stable
Conclusion
The monetary policy differential between Australia and Switzerland is currently wide, with Australia maintaining much higher rates than Switzerland. This supports the AUD/CHF exchange rate, but the effect is moderated by the Swiss franc’s safe-haven appeal and global risk sentiment. Future moves by the RBA to cut rates may narrow the differential, but the gap is likely to remain significant in 2025.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.