The SNB announces its monetary policy decision at 0730 GMT today
The decision later is expected to be a non-event, and the market isn't really positioned for anything else but. However, it's good to get some context on why that is and what we can come to expect from the Swiss central bank later.
1. Inflation forecast
Swiss inflation data has been on the up over the last few months, and it would be no surprise if the SNB revises upwards their quarterly inflation forecasts. SECO made a similar revision earlier this week here so the SNB is expected to follow suit. But this doesn't change the overall outlook as price pressures remain well below the 2% level.
2. The 'highly valued' CHF
Expect a similar language as the one in the March statement on the swissie. With EUR/CHF trading back to 1.1500 levels, the SNB will not be too keen to change its view on the swissie any time soon. A move back towards 1.2000 is what the central bank prefers and wants, so the status quo remains. Also, expect Jordan to highlight that the central bank stands ready to intervene in the market if and when is needed - another reiteration of past meeting statements.
3. Interest rate hike timing
With the ECB already pre-committing to leave rates unchanged until "the summer of 2019", it puts the SNB in a tough spot as they are surely only willing to act after the ECB does in fears it will spur flows back into the swissie and hurt the economic recovery as well as inflation.
The thing about waiting is that the Swiss economy appears to be holding up well this year while the Eurozone economy is facing a soft start to the year. But either way, I still expect the SNB to not follow similar footsteps by the ECB to pre-commit any rate hike timings and keep silent until the ECB has a clear indicator of when rate hikes should come. In essence, no change to the outlook/guidance message is expected as well.
