SNB: Schlegel Sees Lower Swiss Growth In AGM; Otherwise Common Themes

SNB Chairman Schlegel flags Swiss growth risks and highlights the SNB will intervene in FX markets if "price stability is threatened" in his speech at the Annual General Meeting - nothing hugely significant that hasn't been said before. Key highlights:

• An "economic slowdown cannot be ruled out. Growth is likely to be lower than was expected just a few weeks ago" (SNB real GDP forecast was 1.0-1.5% for 2025, 1.5% for 2026 in March meeting)
• FX intervention is "not about achieving a specific exchange rate target. In principle, Switzerland has flexible exchange rates. However, if exchange rate movements influence monetary conditions in such a way that price stability is threatened, then we react" - an (in our view) non-meaningful a rephrasing from a recent Tschudin interview and the usual press statement phrase "willing to be active in the foreign exchange market as necessary")
• The SNB continues to "adjust [its] monetary policy if necessary, to ensure price stability in the future"

Barbara Janom Steiner, President of the Bank Council, meanwhile flags that the SNB will continue to prioritize a strengthening of its balance sheet before payouts because of the risks they face (they could pay a dividend following FY24 for the first time in three years), as well as her critical view on the setup of a Swiss sovereign wealth fund funded by the SNB's FX reserves:

• "The SNB’s balance sheet risks are high and probably much higher since the beginning of this year."
• "Equity capital takes priority over distributions. The SNB must further strengthen its equity capital to be capable of cushioning the high risks to its balance sheet"
• "Sovereign wealth fund for foreign exchange reserves is not a good idea. Such a fund would complicate monetary policy, and the hoped-for higher returns would be associated with higher risks for the state and thus also for us, as taxpayers."