SNB Governing Board member Petra Tschudin is commenting on the inflation and interest-rate outlook, with the central bank keeping the door open to negative rates if needed. At the same time, she cautions against interpreting the SNB’s inflation forecasts as a signal that rates will remain unchanged over the forecast horizon.
Her key comments:
- Artificial intelligence can increase inflation in the short term.
- Swiss inflation is low because of low inflation expectations and the low weight of oil in the Swiss consumer basket.
- Ready to take interest rates below zero if necessary.
- The SNB does not publish interest-rate forecasts; the current inflation forecast should not be taken to mean rates will remain at their current level for three years.
- The franc has weakened because of higher interest-rate expectations abroad.
The comments lean dovish on monetary policy. Most importantly, Tschudin is explicitly keeping negative rates on the table and pushing back against the idea that the SNB’s inflation forecast implies steady rates for an extended period. With Swiss inflation remaining low, the SNB retains room to ease if conditions warrant.
Her explanation for recent franc weakness is also notable. She attributes it largely to higher interest-rate expectations outside Switzerland, which widen rate differentials against the franc. Overall, the message is that the SNB remains flexible, with the policy bias tilted toward easing if inflation or economic conditions weaken further.
The USDCHF has moved higher on the comments and is testing a swing area high between 0.8009 and 0.8018 (see post from earlier) as the focus returns to the CHF and not the USD actions this week.
This article was written by Greg Michalowski at investinglive.com.