Swiss central bank: Wait, see and hope - ING

Charlotte de Montpellier, ING's economist, notes that the Swiss central bank didn't change its monetary policy today and the key rate is still at -0.75% and the franc is still described as "highly valued".

"Since the June meeting, the Swiss franc has depreciated against the euro but appreciated against the dollar. The central bank, therefore, remains in the same position, indicating that it "remains willing to intervene more strongly in the foreign exchange market". This implies that it still intends to use foreign exchange market intervention as the primary instrument of its monetary policy in the coming months."

"Interestingly, the central bank announced it will now publish data on the volume of its foreign exchange market interventions on a quarterly basis instead of just annually. This will therefore provide a clearer picture of the situation. It cannot be ruled out that this decision is linked to the fact that Switzerland is on the US authorities watch list for currency manipulation, and this additional transparency is intended to allay US fears."

"The interesting element of the September meeting is the upward revision of the outlook for GDP and inflation; although this was clearly expected... The SNB now believes GDP will contract by around 5% in 2020, compared to -6% at the June meeting."

"For inflation, the SNB is revising its outlook slightly upwards by forecasting -0.6% for 2020, 0.1% for 2021 and 0.2% for 2022 (compared with -0.7%, -0.2% and 0.2% respectively in June)."

"It is also interesting to note that the Swiss central bank does not even communicate about a possible revision of its monetary policy strategy like the Federal Reserve has done."

"Clearly, the SNB is not there yet or does not wish to communicate about this (let's not forget that the SNB has always preferred surprise decisions in the past). Nevertheless, it is possible that the SNB may have to undertake such an exercise in the coming years."

"Ultimately, as it has done for some time now, the SNB seems to be waiting for better times to see what should be done."