SNB keeps policy rates at -0.75%

SNB kept all rates unchanged at its meeting today, as widely expected. Both the Libor target midpoint and the sight deposit rate were kept at -0.75%.EUR/CHF little changed on the decision, reflecting broadly unchanged market expectations regarding future SNB decisions, i.e. the markets are still projecting at least one 10bp cut in H2. But, the SNB is expected to keep key rates at -0.75% in the near future (details below). USD/CHF moved lower as USD crosses were under pressure this morning following a dovish FOMC last night. 

The Swiss CPI profile was revised slightly higher for 2015-16 and a slightly lower for 2017, which is due to base effects from a higher oil price than assumed in March. Projections are still conditional on an unchanged Libor rate and a weaker CHF. That said, the SNB is still on track for a major miss of the inflation target unless the CHF weakens substantially from here.