Swiss inflation is becoming negative for the first time in four years

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The inflation rate of Switzerland for the first time in four years immersed itself to negative territory, fueling plants that the country would return to interest rates below zero in order to stop the deflationary decline and stop the growing currency.

Data published on Tuesday showed that annual inflation was minus 0.1 percent, and the prices of air transport and accommodation among people dragging the consumer prices index. Prices increased by 0.1 percent of the month.

Traders have increased their plants in recent months that the Swiss National Bank will be Reduce interest rates To zero or below, to deal with delayed inflation and an increase in the value of the Swiss franc, the currency of the marina, which investors bought as a shelter from the trade war of the US President Donald Trump.

Franc is one of the best results of the main currencies this year, increased by almost 11 percent in relation to the dollar and overtaking peers such as Euro and pound. In recent weeks it has approached SFR0.80 in recent weeks of shock in France in 2015.

The stronger Frank drags Swiss inflation, reducing import costs.

Mike Riddell, a Fidelita Fund manager, said that the signs of deflation “will make SNB allergic to the recognition of the Swiss franc”, which may tighten the drop in prices.

He predicted that “any further currency pressure” would probably cause FX market intervention by the central bank to weaken the currency.

It would risk provoking the anger of the White House, which added Switzerland to the list of “currency manipulators” in the last weeks of Trump’s first presidency. Later he was removed from the list under the administration of Joe Biden.

Switzerland historically tried to stop its currency, perceived as a paradise on the financial market due to the relative political and economic stability of the country.

. SNB He kept interest rates below zero for eight years before I returned to a positive territory in 2022 and built a huge portfolio of international assets through currency interventions.

The valuation market is currently in two square rates of rates at the December SNB meeting, which would make the policy rate minus 0.25 percent.

Short -term profitability of government bonds fell on a negative territory, with the profitability of two -year bonds reached even minus 0.23 percent on Tuesday, which is the lowest in three years. Government bonds up to six years of maturity are currently in a negative territory.