SNB’s Tschudin Says Monthly Inflation Number Just One Data Point

(Bloomberg) — The Swiss National Bank won’t be distracted by monthly inflation numbers, according to a senior official.  

“We’re focused on the medium term,” Governing Board member Petra Tschudin said. Referring to a report earlier in the day that showed that annual consumer prices fell below zero for the first time since the pandemic, she highlighted that “this is just one data point.”

Tuesday’s inflation reading won’t have come as a surprise to the SNB, with central bank chief Martin Schlegel repeatedly having warned that negative inflation numbers in individual months were a possibility and that the central bank doesn’t necessarily have to react to them. 

Still, SNB policymakers meeting on June 19 are widely expected to cut their key interest rate by a quarter point, to 0%. Schlegel also has said that negative borrowing costs — which were in place from 2015 to 2022 — are an option, although “no one likes” them. 

Tschudin wouldn’t be drawn on what to expect at the next decision, simply stating that officials will review the data and then gauge the best way forward.

Lower energy costs and the franc’s exchange rate are weighing on prices, because the strong Swiss currency makes imports cheaper. Tschudin stressed that periods of sub-zero inflation typically have coincided with an appreciation of the franc. 

That certainly applies to the current situation, which has seen the currency gain some 10% against the dollar since the beginning of the year due to market uncertainty triggered by Donald Trump’s tariff policy.

Switzerland is currently under US tariffs of 10%, while the government tries to head off much higher levies in negotiations. 

“The uncertainty in connection to the trade-policy situation is very great,” Tschudin said.

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