SNB chairman Schlegel: Inflationary pressure has decreased markedly over the medium term

• Without today’s rate cut, inflation forecast would have been lower
• Will continue to monitor inflationary pressures
• And will adjust monetary policy if necessary to maintain price stability
• Remains willing to intervene in FX market as necessary
• Rate cuts will continue to be the main instrument if monetary policy needs to be eased further
• Developments abroad are the main risk to the Swiss economy
• Political uncertainty in Europe has risen
• Future course of US economic policy is uncertain
• Development of the Swiss franc is still an important factor to be wary about

Given the fact that they lowered their inflation forecasts, it will be crucial to watch how the Swiss franc performs going into next year. The last thing the SNB would want is to invite deflationary pressures again. That especially since the Covid pandemic gave them a get out of jail free card, much like it did for Japan.

This article was written by Justin Low at www.forexlive.com.