Analysts expect the SNB to hold rates at zero amid subdued inflation, reinforcing CHF softness and its role as a funding currency.
The Swiss Franc has weakened toward a year-end EUR/CHF target of 0.94, driven by the Swiss National Bank’s dovish policy stance. Analysts cite subdued domestic inflation and limited near-term imported inflation risks as key factors supporting the SNB’s decision to keep rates at zero for the remainder of the year.
Inflation remains below the midpoint of the SNB’s 0-2% price stability range, with recent CHF depreciation unlikely to lift imported inflation for at least two quarters. Mixed growth signals, including strength in pharmaceuticals but weakness in industrial activity and consumer-facing earnings, further reduce pressure for a hawkish shift.
The CHF is the worst-performing G10 currency against the USD in the third quarter, reflecting its appeal as a funding currency for carry trades amid the SNB’s accommodative stance.