SNB and Norges bank maintains status quo – BBH

Analysts at BBH points out that Swiss National Bank kept policy steady, as expected as it noted that the Swiss franc remains “highly valued” and that the FX market remains “fragile.”  

Key Quotes

“The bank stressed that the current policy stance remains “essential.”  It forecasts inflation averaging 0.6% in 2018 and 0.9% in 2019, down slightly from its December forecasts of 0.7% and 1.1%, respectively.  The SNB also made its first forecast for 2020 inflation, at 1.9%.  The forecasts suggest no hurry to tighten.”

“Norway’s Norges Bank also kept rates steady, as expected.  However, it adjusted its expected rate path upward.  The bank now sees a rate hike as most likely after this summer.  It noted that “Economic growth appears to be somewhat stronger than expected, and the output gap for Norway is closing.  Underlying inflation is low, but rising capacity utilization will probably push up price and wage inflation further out.”

“EUR/NOK is trading at new lows for this year.  The pair broke below the 200-day moving average near 9.53 and is on track to test the August 2017 low near 9.22.  Note that the policy meetings after the summer are on September 20, October 25, and December 13.”