Swiss National Bank preview: Little reason to move
Lead — The Swiss National Bank (SNB) is expected to maintain its policy rate at 0%, largely due to subdued inflationary pressures, as highlighted in the recent analysis. Per the full note source, while inflation has risen to 0.6% year-on-year in May, the SNB sees no pressing need to adjust rates in the near term. With the absence of significant domestic inflationary threats and a stable Swiss franc continuing to exert a disinflationary impact, the path of least resistance appears to favor inaction. Market forecasts reflect this sentiment, with no major high-impact events anticipated in the coming month that could shift this outlook.
What the desk is arguing
The desk posits that the SNB's decision to hold interest rates steady at 0% is justified, given the lack of significant inflationary pressure. This conclusion aligns with insights from the source which note the controlled inflation levels, particularly in light of rising energy prices globally.
The current inflation statistics support the SNB's stance, as the yearly headline inflation rate remains well below the target range set by the central bank, sitting firmly at 0.6%. This suggests that even with rising costs in specific sectors, the broader economic conditions do not warrant a monetary policy shift at this juncture.
Where it sits in our coverage
Our consensus target for EUR/CHF is 1.075, with a range between 1.04 and 1.12. Key firms in the market have set their targets as follows: - jpmorgan: 1.10 (Mar-26) - bofa: 1.04 (Mar-26)
The desk’s view reflects a baseline expectation consistent with jpmorgan's upper target, indicating a shared belief in the stability of the current monetary policy amidst low inflation rates.
How other firms see it
Firms aligned with this view include jpmorgan, suggesting a consensus on maintaining the status quo due to external inflation pressures being relatively contained. In contrast, firms such as bofa express a more cautious outlook, pointing to potential vulnerabilities in the forecast.
The trajectory of EUR/USD will be a closely related focus, as movements in the eurozone could spill over into the EUR/CHF dynamics as central banks address inflationary concerns in their respective jurisdictions.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01SNB likely to maintain 0% rate amidst low inflation.
- 02Current inflation at 0.6% y/y, within SNB's target range.
- 03Stable Swiss franc provides disinflationary benefits.
- 04Consensus view aligns with maintaining the current policy stance.
Market implications
Traders should monitor the EUR/CHF levels closely, particularly the resistance around 1.08, while also keeping an eye on any shifts in the SNB's inflation projections. Given the current context, the upcoming period may be less volatile unless external shocks occur.
Risks to this view
A significant revision downwards of the SNB's medium-term inflation outlook could challenge this stance, leading to increased speculation of future rate cuts. Conversely, any unexpected surge in inflation or Swiss franc depreciation could provoke a reassessment of policy settings.
Articles Swiss National Bank preview: Little reason to move 12:52 FX Switzerland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The Swiss National Bank meets tomorrow and is expected to keep its policy rate unchanged at 0% amid subdued inflation Martin Schlegel, Chairman of the SNB's Governing Board Inflation remains under control Rising energy prices have pushed inflation higher across much of the world, but Switzerland has been largely shielded from this trend. Headline inflation stood at 0.6% year-on-year in May, unchanged from April. Energy prices have, of course, increased in Switzerland (+17.7% year-on-year for petroleum products) as they have elsewhere.
Still, the strength of the Swiss franc continues to exert a significant disinflationary effect. Imported goods, which account for 22% of the consumer price index, rose by only 0.7% year-on-year in May. This marks a clear shift after three years of declining import prices, but it remains well within the SNB’s comfort zone.
Domestic inflationary pressures are also contained, with prices rising by 0.6% year-on-year in May. All in all, inflation in Switzerland has picked up from the 0.1% observed at the start of the year, but remains comfortably within the SNB’s 0-2% target range. Early-year deflation fears have receded for now, while the risk of a sharp inflation increase in the coming months appears negligible.
There is therefore little reason for the SNB to adjust interest rates at its June meeting. Inflation outlook and FX interventions in focus That said, two aspects will be closely watched tomorrow. First, the SNB’s medium-term inflation projections.
In March, these stood at 0.5% on average for both 2026 and 2027, and 0.6% for 2028. A modest upward revision would carry limited implications for monetary policy. With inflation still firmly within the 0-2% target range, a rate hike remains unlikely in the foreseeable future.
Conversely, a downward revision could signal renewed concern about deflationary pressures once the impact of recent energy price increases fades. Even so, such adjustments would not justify a policy move this month. We expect rates to remain at 0% over the next two years.
Second, close attention will be paid to any comments on foreign exchange interventions. The Swiss franc has appreciated in effective terms over the past 12 months, although upward pressures have eased since early March, when the SNB explicitly indicated a greater willingness to intervene. Importantly, in real effective terms, the franc has not become more expensive, thanks to lower inflation in Switzerland compared with its peers.
Sources & References
How we cover this story