Data on Tuesday showed Swiss inflation falling to its lowest level level since COVID.
- consumer prices fell by 0.1% y/y in May, lowest since March 2021
- the SNB has a 0-2% target range
Swiss National Bank (SNB) board member Petra Tschudin commented on May inflation data.
- SNB won’t be distracted by monthly inflation numbers
- “We’re focused on the medium term”
- “this is just one data point”
Head of the Bank, Chair Martin Schlegel, has repeatedly emphasised that individual month negative numbers are a possibility and that the Band doesn’t necessarily have to react to them.
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The SNB next meet on June 19:
- markets are pricing a 25bp rate cut around 70%, from 0.25 to zero
- markets are pricing a return to -0.25 around 30%
Negative inflation is being caused largely by the strong Swiss franc, for example the price of imported goods by 2.4%, along with the drop in energy prices.
This article was written by Eamonn Sheridan at www.forexlive.com.
