• We will continue to observe the situation and adjust monetary policy where necessary to keep price stability
• Low interest rate is effective through the exchange rate
• Midterm inflation pressure is practically unchanged since the previous quarter
• We remain ready to intervene in the currency market as necessary
• Our monetary policy remains expansive
• Monetary policy also supports growth
• Uncertainty has declined slightly, compared to last assessment
• Expect global economy to grow moderately over the next quarters
• However, significant risks persist for global economy, with US tariffs among them
• Monetary policy is appropriate
• Cannot comment on future decisions
• Important is the medium term outlook for inflation, which is basically unchanged
• Unemployment expected to rise slightly, but could then fall again
• We have no preference for inflation as long as it is in the target range
• The bar for negative rates is higher, but remain ready to use them if necessary
• Fiscal situation expected to be supportive for global economy in the coming year
• Interest rate differential between currencies is an important factor for exchange rate

As expected, the SNB downplays the weaker inflation readings we saw in recent months and expects inflation to rise in the coming quarters due to the expansionary monetary policy and better economic growth forecasts.

As a reminder, the US lowered the tariffs on Swiss goods to 15% from the 39% they imposed previously, the highest level among European countries.

This just reaffirms once again that the SNB is unwilling to go back into NIRP (Negative Interest Rate Policy) without clear deflationary data or negative global economic shocks.

REACTION

The USDCHF is now back to flat on the day. As mentioned here, given that it was mostly expected and we have the market pricing 0% chances of further rate cuts, the CHF is unlikely to run much on the back of the SNB policy. In fact, the currency has been mostly driven by the changes in risk sentiment.

The pair bounced right at the key support zone around the 0.7980 level as the buyers stepped in with a defined risk below it to position for a rally back into the 0.81 handle. The sellers will need to see the price breaking below this support to open the door for more downside.