April’s decline in Swiss inflation has reinforced the expectations of a rate cut in June by SNB, with the markets now considering the possibility of a return to negative interest rates, since the strong Franco and global uncertainties weigh on the growth and price stability, the foreign exchange analysts of Danske Bank.
The disappointment in Swiss inflation causes conversations about SNB feat cuts
“Despite a significant drop surprise in Swiss inflation for April, the EUR/CHF ended the day down. The general figure was 0.0%year -on -year (Cons: 0.2%, previous: 0.3%) and the underlying of 0.6%year -on -year 0.3% year -on -year.
“More in general, pressures on prices are still very moderate in Switzerland. The growth context has also worsened for the Swiss economy in the last month, with the uncertainty of the commercial war and the Fort Chf acting as an obstacle to the manufacturing sector. The markets reacted by valuing cuts of just over 30 basic points for the next meeting of the SNB in June and 45 basic points for 2025 negative interest rates policy. “
“We maintain our long forecast data that the monetary policy rate will cut 0% in June. However, after yesterday’s impression, the risks of a return to negative interest rates policy have increased significantly. We hope that SNB will resort to intervention in the currency market before the negative territory is reached. “
Source: Fx Street
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