Swiss Inflation Print and Market Implications
Article published on March 19th, 2025 5:00AM UK Time
The upcoming Swiss inflation print on March 5 at 07:30 AM CET is set to be a key event for the Swiss franc and broader monetary policy expectations. The previous CPI release showed inflation cooling to 0.4% YoY in January 2025 from 0.6% in December 2024. This marked the lowest level since April 2021, with deflationary pressures seen across multiple sectors, including food, healthcare, and transportation.
However, the last inflation print surprised to the upside relative to expectations. This shift altered Swiss National Bank (SNB) rate expectations, with STIR markets no longer pricing in a return to negative interest rates in the short term.
SNB Meeting in Focus
The upcoming SNB meeting on March 20 at 08:30 AM UK time will be critical. If policymakers signal a potential return to negative rates, expect sharp Swiss franc selling. Markets will be closely monitoring any dovish rhetoric, especially given the broader disinflationary trends. The SNB has maintained a cautious stance, but any hint of policy easing would have significant currency implications.
Trade Risks
The reaction in the Swiss franc will depend on inflation dynamics and SNB policy signals. If inflation surprises to the downside in the future, expectations for future rate cuts could resurface, weighing on CHF. Additionally, trade tensions could fuel broader risk aversion, impacting equity markets and driving safe-haven flows. Investors should be prepared for increased volatility with tariff uncertainty circulating in markets. Key focus for this SNB meeting will be how close the SNB see themselves to returning to negative interest rates.