Nomura analysts note that Swiss inflation stayed slightly positive in January, with foreign products still exerting downward pressure as a strong Swiss Franc makes imports cheaper. They highlight that the SNB’s projections remain low but rising, and argue that policymakers are unlikely to return to a negative policy rate soon.
Strong CHF keeps imported prices subdued
“Swiss CPI inflation was 0.1% y-o-y in January (Nomura: 0.0%, consensus: 0.1%), unchanged from 0.1% y-o-y in December. Core inflation also remained at 0.5% y-o-y (as Nomura and consensus expected). Domestic prices increased 0.5% y-o-y, while imported products prices fell 1.5% y-o-y, following the CHF’s strengthening over the past year.”
“On a m-o-m basis, the CPI fell 0.1%, as we expected (-0.06% to 2dp, which is why our forecast missed on the headline y-o-y rate). This was in line with the 0.1% m-o-m decline in January 2025.”
“The SNB’s latest forecast is for inflation to average 0.1% y-o-y across Q1, and today’s data are in line with that. The SNB’s forecast is then for inflation to rise to 0.2% in Q2 and 0.5% y-o-y by Q4.A key downside risk to inflation is the appreciation of CHF.”
“Despite the low inflation forecast, we believe the hurdle is high for a cut to a negative policy rate. We thinkeven a few months of small negative inflation prints would be preferable to a policy rate cut forthe SNB if, overall, it still forecasts inflation to rise.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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