SNB Holds Steady at Zero, Maintains Pressure on CHF Crosses

The Swiss National Bank (SNB) maintained its policy rate at zero for a fifth consecutive meeting, resisting market expectations of future hikes. This decision has kept upside pressure on USD/CHF and EUR/CHF pairs, according to Brown Brothers Harriman (BBH). The SNB's stance has been driven by inflation forecasts remaining below 1%, which the bank sees as within its price stability mandate.

The SNB pushed back against market pricing of 50-75 basis points of hikes in the next twelve months. While the bank did raise its inflation projection slightly due to higher oil product prices, it still expects inflation to remain below 1% over the entire forecast horizon.

BBH notes that the widening yield gap between the US and Switzerland, as well as between the EU and Switzerland, will continue to put pressure on CHF crosses. This means that USD/CHF and EUR/CHF pairs are likely to see upside pressure.