SNB's Martin says swiss inflation and the SNB policy rate remain low despite higher rates and inflationary pressure abroad

• High energy and input prices are weighing on global economic activity and driving up inflation.
• Widening interest rate differentials relative to the major currency areas have led to a depreciation of the Swiss franc.

Comments of this kind from SNB officials sit within the bank's long-running distinction between domestic price stability, which has historically been comfortably inside target, and imported inflation from energy and inputs, which the bank has usually been reluctant to chase with aggressive tightening. The mechanism named here is the textbook one for the franc: widening rate differentials against the major currency areas weigh on CHF through the carry channel, and the SNB has in past episodes treated a weaker franc as tolerable, at times even helpful for imported price pressures, provided domestic inflation stays low. The relevant distinction is between rhetoric that accepts depreciation as a byproduct of policy divergence and rhetoric that treats it as a problem requiring a response; historically the SNB has shifted from the former to the latter only when franc weakness began to feed materially into its inflation forecast. The tells are whether other Governing Board members echo the tolerance for depreciation and whether the language around the exchange rate hardens in subsequent communications, since verbal intervention has been the bank's customary first instrument before any change in stance. As commentary rather than a decision, the signal is directional, with the policy meeting the point at which differential expectations are actually tested.