Swiss National Bank likely to continue to expansionary monetary policy for some time

The Swiss National Bank’s governing board always highlights how significant negative interest rates and an expansionary monetary policy are, noted Commerzbank in a research report. Looking at inflation developments in Switzerland shows that the board cannot underline this often enough: the inflation rate returned into negative territory some time ago, coming in at -0.1 percent year-on-year in November after recording -0.3 percent in October.

This trend does not bode well and gives a little glimmer of hope. However, the situation of the Swiss National Bank continues to be uncomfortable, as the Swiss economy is also feeling the headwinds of the weak global growth as the soft PMI is illustrating.

“Weak growth, high franc levels, negative inflation rates and rising risk aversion due to the trade conflict that leads to renewed appreciation pressure on the franc - all these are factors paint a clear picture: the SNB will (have to) stick to its expansionary monetary policy for some time yet”, added Commerzbank.