Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
BOJ Minutes Signal More Rate Hikes as Inflation Risks Grow 
Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
Singapore Central Bank’s Exchange Rate Policy Explained: Why MAS Uses the S$NEER Instead of Interest Rates 
Japan Economy Minister Downplays Inflation Risks Despite BOJ Warning 
Best Gold Stocks to Buy Now: AABB, GOLD, GDX 
Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
The Swiss National Bank (SNB) in its monetary policy meeting today decided to maintain its current expansionary monetary policy, which basically means:
- Interest on sight deposits at the SNB will remain at –0.75% and the target range for the three-month Libor will remain between –1.25% and –0.25%.
- At the same time, the SNB will remain active in the foreign exchange market, as necessary.
Let’s look at the monetary policy statement for further clues and to assess the bias for future actions:
- SNB said that its policy is intended to make Swiss franc investments less attractive, thus easing pressure on the currency. The Swiss franc is still significantly overvalued. (Dovish bias)
- The policy is also aimed at stabilizing price developments and supporting economic activity. (Neutral bias)
- The new conditional inflation forecast suggests inflation will rise faster over the coming quarters than the SNB predicted in March, largely due to the significant increase in oil prices in the intervening period. However, it feels that the effect of this oil price rise on annual inflation will vanish after the first quarter of 2017. (Mild hawkish bias)
- Thanks to domestic demand, the global recovery is robust in US and China and becoming broad-based in Europe. SNB expects moderate growth of the global economy to sustain. Manufacturing and trade weak. (Neutral bias)
- It feels positive economic signals helped ease the tensions in financial market but risks remain, especially British referendum can cause uncertainties and volatility. (Conditional dovish bias)
- In Switzerland, real GDP grew at an annualized pace of 0.4 percent and recovery will continue. Exports will recover benefiting labor market and corporate investments.
- Mortgage market slowed but prices edged up. (Neutral bias)
With a clear lack of major dovish bias in the statement, we expect SNB to maintain current policy through 2016 and the first quarter of 2017. However, UK’s exit may change that.
Franc is currently trading at 0.963 per Dollar.
