Swiss inflation turns into negative for the first time in four years

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The inflation rate in Switzerland has decreased to the negative lands for the first time in four years, providing bets that the country will return to interest rates without scratch in an attempt to avoid stagnation of contraction and curbing a successive currency.

The data published on Tuesday showed that the annual inflation was 0.1 % incomplete in May, with air transport and residence prices between those who withdraw the consumer price index. Prices increased by 0.1 percent a month.

Traders have increased their bets in the recent months that the Swiss National Bank will do Reducing interest rates To zero or less to deal with late inflation and an increase in the value of the Swiss franc, a haven currency that investors have bought as a refuge from the trade war of US President Donald Trump.

The franc is one of the best major performance currencies this year, an increase of about 11 percent against the dollar, and its peers like the euro and the pound. This has made Greenback near SFR0.80 in recent weeks for the first time since the franc shock was estimated in 2015.

The most powerful franc pulls Swiss inflation by reducing the cost of imports.

Mike Ridel, director of funds at Fidelity, said that signs of contraction “will make SNB allergy to the Swiss French estimate” that may exacerbate prices.

He expected that “any other pressure for the bullish currency” is likely to lead to the market intervention by the central bank to weaken the currency. SNB targets the inflation rate between zero and 2 percent.

This would risk the anger of the White House, which added Switzerland To the “currency maneuvers” list in the last weeks of Trump’s first presidency. It was later removed from the list under the management of Joe Biden.

Switzerland has historically sought to curb its currency, which is seen as a haven in the financial market due to the relative political and economic stability of the country.

the SNB The interest rates, which are less than eight years before returning to the positive lands in 2022, and the construction of a wide range of international origins through currency interventions.

The market is now pricing in discounts in a quarter of points through the SNB meeting in December, which will take the policy price to 0.25 percent.

The revenues of government bonds in the short term decreased to a negative area, as the return on bonds for two years was less than 0.24 percent on Tuesday, its lowest level in three years. Standard government bonds reach six years in the maturity stage now in negative lands.