SNB: Hurdle For Cut To Negative Rates Is Higher Than Cut In Positive Territory

SX7E (19th Dec) 210/230cs, bought for 6.25 in 9k vs ~1.9k at 202.70.

• "I tried to argue you shouldn't be data out turn dependent. I think we went through a phase where the MPC had identified a few key indicators. That was the label key indicators were associated with specific official statistics. And I think we know there are some challenges with official statistics at the moment, but in general, we know that there is noise in any individual time series for a data output. And so I think it is important to say, I think this is reflected in work that is presented in the MPR, that we're trying to extract a signal about pay growth, or about services, price inflation, or about easing in the labour market, and indeed about other things too, which is not reliant on a single indicator, but is trying to draw the relevant information from a broad set of indicators... I think it's important to recognise that it's a set of indicators which don't always point in the same direction, but give you an overall view of these key sort of underlying macroeconomic forces in the economy."
• "If wage growth, pay growth is easing, and that's associated with easier services, price inflation, margins also coming down. So what I said today focused on the model, which put the labour market the centre, but I think also tell a similar story around margins and so forth. So if that is weakening, I think other things equal that will tell you that you are moving through the disinflation process, whether faster or slower than you expected. And that is the key question for me, and I think for the MPC at present."
• "Think there's a disinflation process. We think that validates and justifies a withdrawal of monetary policy restriction and cuts in bank rate. So the debate is about, how fast do you do that in order to secure this lasting, a sustainable achievement of the inflation target, recognising there are risks on both sides."
• "If you take the view that there is more... intrinsic inflation, persistence, it means that you should be reducing policy restrict... more slowly than you might have thought you're going to do on the basis of what you saw. So that immediately gives you a reason to be slower."
• "If you think that there's been some relatively lasting, permanent change in the behaviour of wage and processing behaviour, it's that that's going to decline more slowly than you expected before... if we see data that is suggesting more rapid you can interpret that as suggesting, well, the balance of risks around what the underlying structure of the economy is is shifting away from your concerns."
• "And actually there has been a shift in the behaviour that's driving these things, a shift that reflected in the charts I showed, which is probably meaning there's more persistence in inflation than before."

Of Note:

EURUSD 2.92bn between 1.1245/1.1300.

EURUSD 1.14bn at 1.1250 (wed).

USDJPY 1.49bn at 144.00 and 2bn at 145.00 (fri).

• EURUSD: 1.1195 (1.24bn), 1.1200 (349mln), 1.1220 (243mln), 1.1245 (727mln), 1.1250 (769mln), 1.1275 (248mln), 1.1300 (1.18bn).
• USDJPY: 145.00 (845mln).
• USDCAD: 1.3900 (339mln), 1.3915 (454mln).