Data on Tuesday showed Swiss inflation falling to its lowest level level since COVID.

• consumer prices fell by 0.1% y/y in May, lowest since March 2021
• the SNB has a 0-2% target range

Swiss National Bank (SNB) board member Petra Tschudin commented on May inflation data.

• SNB won’t be distracted by monthly inflation numbers
• “We’re focused on the medium term”
• “this is just one data point”

Head of the Bank, Chair Martin Schlegel, has repeatedly emphasised that individual month negative numbers are a possibility and that the Band doesn’t necessarily have to react to them.

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The SNB next meet on June 19:

• markets are pricing a 25bp rate cut around 70%, from 0.25 to zero
• markets are pricing a return to -0.25 around 30%

Negative inflation is being caused largely by the strong Swiss franc, for example the price of imported goods by 2.4%, along with the drop in energy prices.

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