SNB Inflation Projections Fall Short as Swiss Franc Strengthens

The Swiss National Bank's (SNB) inflation projections have been consistently surpassed by actual data, according to a recent analysis by Nomura. The latest readings show a year-on-year increase of just 0.8% in the first quarter of 2025, below the SNB's forecasted 1.2%. This persistent undershoot suggests that domestic price pressures remain subdued, despite global inflationary trends.

The stronger Swiss Franc has contributed to lower import prices and weak domestic demand, which are largely responsible for the undershoot. The CHF's status as a safe-haven currency means it often strengthens during global uncertainty, further exacerbating the inflation undershoot by making imports cheaper.

Nomura suggests that the SNB may need to intervene in foreign exchange markets to weaken the CHF and support price stability and economic growth.