Swiss National Bank preview: Still no reason to move
The desk anticipates that the Swiss National Bank (SNB) will maintain its current policy rate at 0%, given the relatively low inflation rates despite stronger recent economic growth. Per the full note , the Swiss economy's GDP growth surprised on the upside at 1.5% quarter-on-quarter, largely thanks to volatility in the chemicals and pharmaceuticals sectors. This stronger growth forecast is not expected to pose inflationary risks, leading to our conclusion that the SNB will remain on hold in the near term.
What the desk is arguing
The desk believes that the Swiss National Bank will refrain from adjusting its monetary policy in the upcoming meeting. This view is bolstered by the recent economic data indicating robust GDP growth, which, however, has not translated into significant inflationary pressures as highlighted in the source commentary.
While the growth figures are impressive, including a notable 1.5% quarter-on-quarter increase in GDP, the underlying economic dynamics suggest that much of this uptick is tied to specific sectors like chemicals and pharmaceuticals rather than a broad-based recovery. Therefore, the desk asserts that the central bank remains in a prudent stance, maintaining the policy rate at 0% over the near term.
Where it sits in our coverage
Our consensus target for the USD/CHF pair is 1.075, with a range spanning from 1.04 to 1.12. Notably, firms like jpmorgan, which targets 1.10 for March 2026, reflect a similar outlook towards a steady policy rate from the SNB.
This position aligns with the broader market sentiment, as other firms like bofa are less optimistic, suggesting a lower target of 1.04 for the same tenor. The desk's stance is positioned at the higher end of the consensus range, indicating a marginally more bullish outlook among our tracked forecasts.
How other firms see it
Most firms, including jpmorgan, are aligned with the desk's view on the SNB maintaining current policy, anticipating stability given the low inflation environment. In contrast, bofa presents a more cautious stance, suggesting that significant changes in economic growth would necessitate a policy shift.
Traders should keep an eye on USD/CHF movements, as any indications from the SNB's policies or shifts in inflation metrics will be critical to market dynamics. The interplay of these factors could also affect broader sentiment towards risk assets as well as the euro's trajectory against the Swiss franc.
What the calendar says
There are no upcoming high-impact events in the next 30 days that could directly affect the Swiss National Bank's positioning or influence the broader Swiss economic outlook.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01The SNB is expected to keep interest rates at 0% amid low inflation despite stronger GDP growth.
- 02Recent GDP growth of 1.5% is primarily driven by the volatile chemicals sector, suggesting potential deceleration ahead.
- 03Market consensus reflects a cautious view on policy movements, with forecasts varying from 1.04 to 1.10 for USD/CHF.
- 04Maintaining stability in monetary policy is seen as crucial, given the reduced inflationary pressures in the Swiss economy.
Market implications
Traders should monitor the USD/CHF pair for any potential shifts around the 1.075 level, as the SNB's decisions and inflation metrics could influence market movements. Positioning signals ahead of key announcements or inflation data could provide trade opportunities.
Risks to this view
The main risk to this outlook would be an unexpected rise in inflation, which could prompt the SNB to reconsider its current policy stance. Furthermore, any significant economic data surprises in Switzerland might shift the market's perception regarding rate changes.
Articles Swiss National Bank preview: Still no reason to move Published 13:15 Switzerland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Swiss economic growth has recently surprised on the upside, but inflation remains too low to warrant a change in monetary policy. We expect the Swiss National Bank to keep its policy rate at 0% next Thursday and to remain on hold over the coming quarters Charlotte de Montpellier Swiss National Bank Chairman Martin Schlegel The economy has performed better than expected The Swiss economy has recently delivered a positive surprise. GDP adjusted for sporting events increased by a particularly strong 1.5% quarter-on-quarter in the second quarter.
Importantly, this figure is not annualised, making the expansion all the more remarkable. Growth was broad-based across sectors and demand components, in line with the improvement in confidence indicators. The headline figure nevertheless probably overstates the underlying strength of the economy.
Almost half of the quarterly increase came from the volatile chemicals and pharmaceuticals sector, alongside a sharp rise in exports. A deceleration is therefore likely in the second half of the year. Even so, the economy is clearly performing better than anticipated a few months ago.
We have raised our forecast for GDP growth to an average of 1.9% in 2026, while we expect growth of 1.6% in 2027. The stronger outlook reflects the solid performance recorded in the first half of the year, somewhat more favourable international demand and the recent slight weakening of the Swiss franc. Domestic demand should also continue to expand, supported by private consumption and stronger capacity utilisation.
Stronger growth is not an inflation risk The stronger growth performance does not, in our view, represent a significant risk to price stability. The consequences of the global energy shock are visible in Switzerland, but they remain much less severe than in most other developed economies. Following the rise in global energy prices, headline inflation increased to 0.8% year-on-year in August, from 0.4% in July.
This was largely driven by petroleum product prices, which were 25.2% higher than a year earlier. Nevertheless, inflation remains comfortably within the SNB’s 0-2% inflation target. More importantly, underlying inflationary pressures remain extremely weak.
Excluding petroleum products, Swiss inflation stood at just 0.3% year-on-year in August. This suggests that the energy shock has not translated into broad-based price pressures and that domestic second-round effects remain limited. The strength of the Swiss franc continues to play a considerable role in keeping inflation below that of Switzerland’s main trading partners.
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