**As seen in Risk In The Week report 03/30/24, subscribe at cablefxm.co.uk/reports
An upside surprise materialized in February Swiss consumer prices, the headline printed at 1.2% Y/y vs the consensus forecast of 1.1%. However, the metric did not challenge the downward trend as it came below the prior reading. The core figure came in at 1.1% Y/y, it hit the lowest level since early 2022. On a monthly basis, an uptick in service categories grabbed attention as the measure accelerated by 0.9% vs the prior 0.2%, and good prices rose 0.2%. The readings were faster than prior months but prices remained within target and this was reflected in the SNB's March quarterly monetary policy decision.
Despite the headline seen rising in March, economists do not expect a reversal of the prior trend as they pencil CPI at 1.5% in 2024, the desks at Citi and UniCredit stand below consensus as they forecast the region at 1.0% and 1.2%, respectively. The SNB is now officially easing monetary policy before the ECB, inflation prints ahead will have a high bar for the central bank to express caution. Strategists are now engaging in short CHF expressions as it has more room to unwind 2023 gains and the prior strength is seen hurting domestic companies. Nomura thinks that the SNB is not limited to rate cuts but it can also use FX intervention to limit the pace of disinflation.
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