• Since the December meeting, financial market situation has been characterised by elevated volatility
• Middle East conflict has resulted in surge in energy prices, which led to a global rise in inflation expectations
• With the appreciation of the Swiss franc since December, monetary conditions are tighter
• However, monetary policy remains expansionary
• The board discussed the various factors responsible for the movements in the Swiss franc exchange rate
• One factor is the Swiss franc’s role as a safe haven
• The discussion also addressed the latest developments in energy prices
• Uncertainty about the future course of oil prices remains high
• The board also discussed the conditional inflation forecast, which assumes that the policy rate remains at 0%
• In the short-term, it is higher than the December forecast due to the rise in energy prices
• In the medium-term, the appreciation of the Swiss franc reduces inflationary pressure, countering possible second-round effects of the rise in energy prices
• Therefore, the inflation forecast over the medium-term is very close to that of the previous quarter
• Despite the escalation in the Middle East, the scenario for global economic developments has not changed fundamentally
• In light of the outlooks presented with regards to inflation and the economy, monetary conditions remain appropriate
• Monetary policy can currently still be considered expansionary
• However, the SNB’s willingness to intervene in the foreign exchange market should remain high in order to counter a rapid and excessive appreciation of the Swiss franc, which would jeopardise price stability in Switzerland
• Full minutes

More to come..

This article was written by Justin Low at investinglive.com.