SNB REVIEW: Largely unexpected 25bp cut

A largely unexpected 25bp rate reduction from the SNB, which sparked marked CHF depreciation and a modest broader dovish reaction. A cut which was justified by the significant progress made in combating inflationary pressures in recent months, the view that inflation will remain within the 0-2% target bound for the next few years and marked CHF appreciation. As usual, the statement provided no firm guidance on the policy path but did make clear that there is optionality to adjust to ensure inflation remains within the target band. An addition which provides them with some cover if their significantly revised inflation forecasts prove too cool. Thereafter, Chairman Jordan made clear that no forward guidance was being provided and the situation will be assessed in June. For reference, market pricing has around a 70% implied probability of another 25bp cut at the next meeting. Finally, the statement's FX language was reiterated with Jordan highlighting this in the presser and adding that neither the buying or selling of foreign currency is currently in focus. 

21 Mar 2024 - 13:00- Fixed Income- Source: Newsquawk