CHF: Safe haven appeal offsets SNB stance – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad highlights that Switzerland’s April Consumer Price Index (CPI) was mixed, with headline inflation boosted by energy but core CPI slipping to a multi‑year low. Haddad argues benign underlying inflation allows the Swiss National Bank (SNB) to keep rates steady and fade pricing for a hike, yet believes the Swiss Franc’s (CHF) safe‑haven status should outweigh any drag from softer rate expectations.

Mixed CPI but Franc support persists

"Switzerland April CPI was mixed. Headline CPI matched consensus at 0.6% y/y (highest since Q4 2024) vs. 0.3% in March due to higher energy prices."

"Headline inflation is largely in line with the Swiss National Bank’s (SNB) Q2 projection of 0.5%. Core CPI unexpectedly dipped to a multi-year low at 0.3% y/y (consensus: 0.5%) vs. 0.4% in March."

"Regardless, CHF safe haven status more than outweighs the drag to the currency from a possible downward adjustment to SNB rate expectations."

"Benign underlying inflation leaves plenty of room for the SNB to look through the energy shock and keep rates steady for some time. As such, we would fade market pricing for a 25bps SNB hike to 0.25% by year-end."

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