Nomura analysts note that Swiss inflation stayed slightly positive in January, with foreign products still exerting downward pressure as a strong Swiss Franc makes imports cheaper. They highlight that the SNB’s projections remain low but rising, and argue that policymakers are unlikely to return to a negative policy rate soon.

Strong CHF keeps imported prices subdued

"Swiss CPI inflation was 0.1% y-o-y in January (Nomura: 0.0%, consensus: 0.1%), unchanged from 0.1% y-o-y in December. Core inflation also remained at 0.5% y-o-y (as Nomura and consensus expected). Domestic prices increased 0.5% y-o-y, while imported products prices fell 1.5% y-o-y, following the CHF’s strengthening over the past year."

"On a m-o-m basis, the CPI fell 0.1%, as we expected (-0.06% to 2dp, which is why our forecast missed on the headline y-o-y rate). This was in line with the 0.1% m-o-m decline in January 2025."

"The SNB’s latest forecast is for inflation to average 0.1% y-o-y across Q1, and today’s data are in line with that. The SNB’s forecast is then for inflation to rise to 0.2% in Q2 and 0.5% y-o-y by Q4. A key downside risk to inflation is the appreciation of CHF."

"Despite the low inflation forecast, we believe the hurdle is high for a cut to a negative policy rate. We think even a few months of small negative inflation prints would be preferable to a policy rate cut for the SNB if, overall, it still forecasts inflation to rise."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)