**As seen in Risk In The Week report 09/29/23, subscribe at cablefxm.co,uk/reports
August inflation figures saw consumer prices print unchanged at 1.6% Y/y, this was higher than the consensus of 1.5%. The core metric came in at 1.5% Y/y, in line with expectations. The monthly print saw CPI rising by 0.2%, this was the fastest pace since May, however, the report showed inflation remained below target heading into the SNB. The central bank decided to leave rates unchained during its quarterly meeting, the lack of action surprised markets. A look at our own inflation monitor shows Switzerland as the only G10 country to hold inflation under its central bank target, below target CPI has been present for the last three months. Much of today’s Swiss stable prices can be attributed to its currency, the franc has appreciated this year to lead the G10, which has capped imported prices. Analysts at ING noted that while the SNB is currently expecting a pickup in prices over the short-term, the central bank revised its inflation forecasts for 2H 2024 and on. ING added that the SNB revising its CPI projections further below target is a dovish signal. Strategists at Barclays flagged that the franc could become a funding currency of choice as the SNB’s peak rate is likely to have solidified. Barclays said that the CHF is now screening “overvalued” across a suite of models.
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