SNB: Inaugural Meeting Minutes Preview: NIRP Thoughts in Focus (2/2)

• On the bar to negative rates: Chairman Schlegel referred to the meeting minutes in the September Q&A when being asked how close the Governing Board was to cutting into negative territory. Any info in the summary document suggesting the Governing Board seriously considered such a move may prompt a dovish repricing in Swiss STIR. However, the summary document may also signal that the Governing Board was far away from a cut, and that a material shock would have to filter through for them to come close to such a move. This may see a further tapering of remaining easing priced into the Swiss curve.
• On the potential opening remarks signal: In his September opening remarks, Schlegel did not repeat the "undesirable side-effects" and "challenges" associated with negative rates which he mentioned in June, remaining more neutral on the policy outlook. If this was a deliberate choice, two interpretations seem possible: Either, the Governing Board thinks the probability of negative rates has risen marginally since June (or their assessment of the risks associated with them may be lower than previously seen) and, even if they did comment on it in the Q&A, that led them to cut out the comments out of the opening remarks.
• However, the other option is that the Governing Board thinks that negative rates have moved out of focus or are improbable enough that comments in the opening remarks are no longer warranted. The Governing Board was not asked on their rationale here in the September Q&A.
• On FX valuations: The SNB continues to refrain from giving close guidance on CHF levels, but did comment broadly on material moves. Indeed, Schlegel commented that the CHF had appreciated "really a lot" in the aftermath of the US tariffs announced on April 2 this year. Any further info on the Governing Board's views would prove insightful.

Our September meeting review including a rough Q&A transcript is here.