Peter A Rosenstreich
Swissquote Bank Ltd
“There is no simmering trade war,” “international trade remained dynamic” – so spoke the Swiss National Bank today as it held monetary policy unchanged. Maybe this Jedi Mind Trick of saying something and so making it true will work, but we wonder. It overlooks risks that could strengthen the CHF and move Swiss inflation. The SNB is likely to continue guiding the market by highlighting conditions that support its objective. Or perhaps they are just seeing through the short-term hype.
The SNB still views the CHF as highly valued (despite EUR/CHF nearing 1.20) and reiterated its participation in foreign exchange markets as necessary. Speculation that the SNB would lead the European Central Bank on policy tightening continues to be off the mark: the inflation forecast shifted downwards for 2018 from 0.7% to 0.6%, hardly enough to move interest rates. The SNB expects economic growth of 2.4%, driven by manufacturing. Mortgage lending is down, but house prices are starting to rise, warning of a potential correction. Overall, the SNB is content with the current policy and in no rush to adjust. We suspect that the first hike will occur in 2019, a solid 6 month after the ECB’s.
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This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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