The SNB is not moving, unwilling to disrupt the markets' current narrative. From the SNB vantage point, macro and domestic conditions are in a sweet spot for current policy. Inflation rates have improved but are nowhere near the SNB target rate, while the short CHF is on most analysts' top calls for 2018. All the while growth outlook has improved, led by export and manufacturing, supported by the weak CHF.
The SNB will remain on the sidelines, keeping rate unchanged and reiterating that its pledge to intervene in the FX markets is needed.
SNB members will continue to sound caution on exchange rates, believing the CHF remains overvalued. Despite the improving backdrop, it's unlikely the SNB will get ahead of the ECB in tightening. This would put the first hike well into 2019 indicating that current pricing it too optimistic.
We remain long on EUR/CHF.