The SNB delivers no change in June
The Swiss National Bank left its policy rate unchanged at 0.00% this morning, a fully priced outcome that, in line with our preview of today’s decision, was always going to be a non-event for rates, marking roughly a year at zero.
The interest sat instead with the FX language and the inflation profile, and neither delivered much of a surprise. A modest tweak to language around FX interventions should not be overinterpreted in our view. The bias remains to weigh against franc strength, as it was back in March. As such, EURCHF is likely to continue trading around the 0.92 mark for the time being.
Looking first at the inflation profile, the Bank nudged its near-term inflation path slightly higher on firmer energy and raw-material prices. The 2028 projection, at the end of the forecast horizon, was revised marginally upward to 0.7%, even as medium-term inflationary pressure was described as "virtually unchanged", with a temporary dip around mid-2027 attributed to fading energy base effects. Combined with a fractional downgrade to growth projections, this marks-to-market the Bank’s forecasts without offering a meaningful change in view, limiting any market implications.
In contrast, we suspect that updated language on FX interventions will garner more attention from traders post-event.
A line that back in March read: “Given the conflict in the Middle East, the SNB's willingness to intervene in the foreign exchange market has increased” has now been changed to say that: “If necessary, the SNB has an increased willingness to intervene in the foreign exchange market.” This, we think, is a distinction without a difference. The Bank’s view of underlying conditions remains unaltered, with the franc similarly little moved, relative to March levels. In that context, we are inclined to view this phrasing adjustment as cosmetic, rather than signalling an increased commitment to weaken the franc, as we have seen suggested elsewhere this morning. Press conference Comments from Schlegel when questioned specifically on this point also appeared to de-emphasize the directional implications of the language change.
Still, the franc has drifted marginally weaker post-release, albeit any softness remains well contained.
Given our view that today’s decision delivered no meaningful shift in approach from the SNB, we look for EURCHF to remain stuck around 0.92 for as long as Middle East tensions continue to keep risk conditions elevated.