Expect no change in SNB’s monetary policy today - Commerzbank

Analysts at Commerzbank provide a brief sneak peek at what to expect from the Swiss National Bank (SNB) quarterly monetary policy assessment due out later today at 0830GMT.

Key Quotes:

“The Swiss National Bank (SNB) is likely to feel quite relaxed at its rate meeting tomorrow.

EUR-CHF has now established itself above the 1.16 mark so that interventions against the franc have become unnecessary now.

As a result the SNB is likely to repeat tomorrow that it merely considers the franc to be "highly valued".

In September it had first stopped referring to CHF as being "significantly overvalued".

However, it will not want to cave in completely, it is still too early to do that and EUR-CHF would have to trade at much higher levels.

As a result the SNB will continue to stress that it will be prepared at all times to intervene on the FX market.

The SNB is likely to adjust its growth and inflation outlook to the upside tomorrow, but this will not lead to a change in its monetary policy.

As long as the ECB remains expansionary the SNB will not want to risk making the franc more attractive again by normalising its monetary policy.

The inflation trend would have to be much better for that to happen as otherwise any external shock would rekindle the risk of a return to negative prices.

In other words: despite the improved growth and inflation outlook the SNB will not change its monetary policy.... it will continue to monitor EUR-CHF and hope that EUR-CHF will continue to rise, and will only actively intervene on the FX market if we see an appreciation shock in CHF.”