Switzerland reported a drop of 0.3% in consumer prices in November. Expectations stood on no change in prices after a rise of 0.1% in October, which also fell short of expectations.
One of the goals of the floor under EUR/CHF was to fight deflation. This recent drop in prices shows that achieving this goal is a tough task.
This report came after Switzerland also reported a low PPI. The recent strength of the euro certainly helps the Swiss National Bank maintain the peg, as EUR/CHF even rose above 1.2160. In the past, there was speculation that the SNB could raise the floor to 1.25 or even all the way up to 1.40.
The SNB convenes for a rate decision only once every three months. The next meeting is close, on December 13th. No change is expected in policy, despite the drop in prices. Exporters are still doing OK, as the trade balance surplus shows.
For more, see the latest Swiss Franc outlook.
