The European Central Bank (ECB) held its deposit rate at 2.5% on 29 October 2026, in Frankfurt. On the same day, it announced that its president, Christine Lagarde, will step down on 7 February 2027, nearly nine months before the end of her term. For the euro-Swiss franc pair, two levers remain in play: the interest rate gap with the Swiss National Bank (SNB), whose policy rate stands at 0%, and concerns over French debt.

An expected rate decision, an acknowledged energy risk

The status quo was expected. On the morning of the meeting, the AWP news agency, relayed by Allnews, reported that the economists' consensus was for an unchanged deposit rate of 2.5%. This level follows two hikes decided in 2026 to contain inflation, driven mainly by rising energy prices linked to tensions in the Middle East.

The decision statement cites energy as the reason for caution. “Energy prices have continued to increase, posing upside risks to the inflation outlook and downside risks to the growth outlook,” the ECB writes. It also notes that “financing conditions have tightened” since September, which should “weigh on inflation and growth”.

The economic situation also argues for waiting. The eurozone PMI, published by S&P Global, fell from 53.1 points in September to 51.9 in October 2026, its lowest level in four months. Holger Schmieding, economist at the German bank Berenberg, also pointed to the Strait of Hormuz, where the situation could change after the US midterm elections on 3 November. “The ECB may prefer to wait until things become clearer,” he said before the meeting.

The US Federal Reserve (Fed) had made the same choice the day before, holding its rates after a hike in September. Looking ahead, most of the economists cited by AWP expect a final ECB hike in December, when it will have new growth and inflation forecasts. This is a forecast, not a decision.

Christine Lagarde will leave on 7 February 2027

The announcement of her departure overshadowed the rate decision. According to the ECB statement, cited by Allnews, Christine Lagarde informed the Governing Council and António Costa, President of the European Council, of her decision. Her eight-year term was due to run until the end of October 2027, the financial website finews.ch points out.

A former French finance minister, Christine Lagarde, 70, has led the ECB since November 2019, after heading the International Monetary Fund (IMF). Her term spanned the Covid-19 pandemic, then the surge in energy prices triggered by the war in Ukraine.

The timing carries political weight, according to both media outlets. A departure in February allows French President Emmanuel Macron to take part in choosing her successor before the French presidential election in spring 2027. According to AWP, polls place Marine Le Pen among the frontrunners. According to finews.ch, the Financial Times reported as early as February 2026 that Christine Lagarde wanted to leave before that vote, fearing that a victory for the Eurosceptic right would complicate her succession. In September, she herself had mentioned leaving “a few months” early.

Her next step is not known. At the end of September she ruled out running for the Élysée, and she is among the names mentioned to head the World Economic Forum (WEF) in Davos.

Who will choose Christine Lagarde's successor?

The appointment falls to the European Council, under the procedure laid down in the European Union treaties. According to finews.ch, it is the heads of state and government of the 21 eurozone countries who decide. Several names have been circulating for months:

  • Klaas Knot, former governor of the central bank of the Netherlands;
  • Pablo Hernández de Cos, former governor of the Bank of Spain, now head of the Bank for International Settlements (BIS);
  • Joachim Nagel, president of the Deutsche Bundesbank, the German central bank, cited by finews.ch;
  • Isabel Schnabel, member of the ECB Executive Board, who had expressed her interest but will join the IMF in Washington in early January 2027, according to finews.ch.

The succession will play out alongside other changes. According to AWP, several key ECB posts are due to be filled, including that of chief economist Philip Lane.

French debt, Frankfurt's other file

French government borrowing rates are moving at levels unseen for more than twenty years. They crossed the 5% threshold in the week before the meeting, a first since 2002, according to AWP. They then eased to 4.94% on 28 October, then to 4.92% on 29 October.

The spread with Germany is measured differently depending on the source. AWP puts it above 1.5 percentage points at ten years, a level unseen since autumn 2011. The Keystone-ATS agency estimated it on 22 October at just under 1.7 points, the highest in 15 years. The two readings, taken on different dates, describe the same trend.

For the ECB, this rise acts as additional tightening, as it makes credit more expensive for households and businesses. It also fuels fears of contagion to other eurozone countries. For this, the ECB has the Transmission Protection Instrument (TPI), created in 2022 and never used, which in theory allows massive purchases of government bonds. Its activation seems remote, according to AWP. “The means to curb the surge in yields on French debt must first be found in France,” Christine Lagarde recently insisted.

Economists doubt a swift recovery. Michel Martinez, chief Europe economist at Société Générale CIB, believes that stabilising French debt “would require a primary surplus of around 2 to 2.5% of GDP, compared with a primary deficit of close to 2.8% at present”. For Oliver Rakau, economist at Oxford Economics, the ECB “will try to say as little as possible” so as not to stoke market concerns.

Euro-Swiss franc: a 2.5-point rate gap with the SNB

The first channel to Switzerland is the rate gap. The ECB pays 2.5% on deposits, while the SNB policy rate was held at 0% on 24 September 2026. The Swiss National Bank's website still showed it at 0.00% on 21 October.

BenchmarkECB (eurozone)SNB (Switzerland)
Reference rateDeposit rate: 2.5% (29 October 2026)Policy rate: 0% (24 September 2026)
Moves in 2026Two hikes, then a holdHold on 24 September 2026
Next decisionDecember 2026: final hike expected by most economists10 December 2026: views divided
Inflation citedUpside risks linked to energySNB forecast: 0.7% in 2026, 0.8% in 2027

This gap initially weighed on the franc. According to Keystone-ATS, the franc's slight weakness in the weeks before 22 October was mainly due to this differential: the SNB kept its rate at zero thanks to low inflation, while the ECB and the Fed raised theirs. In early October 2026, one euro was worth nearly 0.95 francs.

Doubts over France then reversed the trend. On 19 October, the euro was falling against the dollar by 0.28% at midday, hit by French tensions. The SNB showed 0.9253 francs per euro on 21 October. The next day, the euro fell back below 0.92 francs, the franc's strongest level since early July, as detailed in our article on the Swiss franc as a safe haven. None of our sources gives the rate on 29 October, or the pair's reaction to the ECB announcement.

What this means for Swiss exporters

A stronger franc reduces the value, once converted into francs, of sales made in euros. The flavour and fragrance maker Givaudan showed this over the first nine months of 2026: currency effects weighed by 4%, or 234 million francs, on sales of 5.89 billion.

Foreign trade had held up so far. According to the Federal Office for Customs and Border Security (FOCBS), Swiss exports rose by 1.5% in September 2026, to 23.2 billion francs. But France weighs on certain sectors: together with Italy, it is the second-largest destination for Swiss watchmaking, according to Jean-Philippe Bertschy, analyst at the bank Vontobel.

Swiss banks differ on the scale of the move to come. Valiant bank considers it reasonable to expect further inflows into the franc. Union Bancaire Privée (UBP) sees the euro-franc pair as a barometer of eurozone risks and considers a rate of just under 0.90 francs possible in the medium term. These are bank projections, not findings.

The SNB is keeping its options open. On 24 September 2026, it said it was ready to intervene in the foreign exchange market if necessary, without seeing a need to strengthen this stance, according to the summary of its deliberations published on 22 October. Its next meeting, the SNB quarterly assessment, is set for 10 December 2026.

Readings of this date diverge. Raiffeisen economists believe that an SNB rate hike could come as early as that date. Financial expert Dirk Renkert, cited by Keystone-SDA, believes on the contrary that the SNB should not be “in any particular hurry to raise its rates”. A Swiss hike would narrow the gap with the ECB, while an ECB hike in December would widen it. The Swiss National Bank's decisions are followed in our SNB and rates section.

What we don't know yet

  • The name of Christine Lagarde's successor and the date of their appointment by the European Council.
  • The ECB's decision in December: the expected hike remains an economists' forecast.
  • The SNB's decision of 10 December 2026, on which views diverge.
  • The reaction of the euro against the franc to the 29 October announcement: our sources give no rate for that day.
  • Any SNB intervention in the foreign exchange market since 24 September: no source specifies one.
  • The measured impact of October's strong franc on exporting SMEs, which has not yet been quantified.

Sources