🥱 Crisis at 0.8%

Swiss inflation hit 0.8% in August, the fastest in almost two years, and beat all 16 forecasts in the economist survey. (16 professionals, 16 misses, on a number that rounds to nothing. Somewhere in Zurich a strategist got an email.) The Fed looked at 3.4% inflation and hiked for the first time since 2023. The ECB looked at 3.3% and hiked for the second time in three months. And on Thursday the SNB looked at 0.8%, held at 0%, where it has sat since June 2025, and lifted its 2026 growth forecast to 1.5-2.0% from roughly 1%. What would a hike even be for? That's the whole decision. I mean, that's it. A war in the Gulf sends oil through the roof, half the rich world tightens, and the Swiss response is to note that pharma had a good quarter.

The ECB is raising rates into a supply shock with eurozone bond yields at multi-decade highs and energy inflation at 14.3%, which is like treating a nosebleed with a tourniquet. If this is it, it will be the shortest ECB hiking campaign in 15 years: two moves and done, because there is not much growth left to squeeze. The eurozone imports its energy, its inflation and, increasingly, its monetary policy from a war it has no say in. The Fed, meanwhile, hiked while the president was publicly leaning on the chairman not to, so a 12-0 vote for a quarter point now gets reported as a test of institutional independence. Passed, barely. In Washington this counts as a triumph. In Bern, where the SNB is legally barred from taking instructions from the government, the whole drama would be harder to stage.

(The SNB earned this boredom the hard way. In January 2015 it scrapped the CHF1.20-per-euro floor it had defended for three years, without warning, the franc briefly spiked 30%, two FX brokers were dead within 24 hours, and the bank then spent more than 7 years at minus 0.75%, buying foreign assets until its balance sheet was bigger than Swiss GDP. That is the institution now praised for restraint. It earned the right to look boring today by doing something insane once.)

The franc sits at a one-year low against the euro, around CHF0.94 per euro, which explains much of why August's inflation showed up at all: imports cost more when your currency stops climbing. The SNB said, as always, that it stands ready to intervene in currency markets. It won't need to. It projects 0.7% inflation this year, 0.8% next year, 0.8% in 2028, all assuming rates stay at zero, and markets don't price a hike before mid-2027. Three years, flat line. Sure, watching rates at 2.5% across the border, a Swiss saver gets envious. Then a glance at what the German pays for petrol and what Berlin pays to borrow, and the envy passes. Sweden held at 1.75% and hinted at hikes. Norway went to 4.50%. Switzerland went to lunch.