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Swiss inflation remained below expectations in March, with the annual CPI rising to 0.3% yoy from 0.1% yoy, while the monthly CPI grew by 0.2% mom against forecasts of 0.5% mom. The data underscores weak underlying price pressures despite a slight increase in energy-related components. The Swiss National Bank (SNB) is likely to maintain its accommodative stance, as inflation remains far from its 2% target. This subdued inflationary environment may delay rate hikes, supporting the Swiss franc’s weakness against majors like the euro and dollar.
For forex traders, the muted inflation data reduces immediate pressure for SNB rate hikes, which could keep the CHF underpinned by carry trade flows. The EUR/CHF and USD/CHF pairs may see increased volatility as markets price in delayed tightening. Additionally, the divergence between headline and core inflation could fuel speculation about SNB intervention in the foreign exchange market.
Looking ahead, investors should monitor the SNB’s policy statements and upcoming inflation forecasts. If energy prices stabilize, core inflation might show signs of acceleration, potentially shifting the central bank’s rhetoric. Traders should also watch for cross-asset correlations, as Swiss inflation data often influences European monetary policy discussions.
