SNB preview: Expected to keep the status quo despite the recent miss in inflation

The Swiss National Bank (SNB) is expected to keep interest rates steady at 0.00%. Despite recent inflation data missing forecasts, the central bank is likely to downplay this miss. Recent developments in trade, particularly the lowering of tariffs on Swiss goods from 39% to 15%, have bolstered the economic outlook and reduced market bets on negative rates. The SNB may slightly downgrade its inflation forecast for 2026 while upgrading growth prospects due to the favorable tariff changes. In its statement, the SNB is expected to maintain the message of readiness to act in the foreign exchange market as necessary, with no significant shifts in policy guidance likely. Chairman Schlegel may emphasize expectations for inflation to pick up in the coming months and reiterate that the threshold for negative interest rates remains very high. Initial market reactions may see some short-term strength in the Swiss Franc due to the positive economic outlook, but the broader picture suggests limited changes as the SNB is likely to remain on hold for an extended period. Consequently, the Swiss Franc is expected to remain a risk-on/risk-off play, with monetary policy divergences likely impacting 2026.