Actions may speak louder than words but for the present the SNB is hoping that the threat that it may take a future decision to weaken the CHF will be sufficient to stop the unit appreciating.  As expected, the SNB this morning revised lower its growth and inflation forecasts. 

It did not, however, raise the ‘floor’ on EUR/CHF beyond the 1.20 that it had laid down on September 6.  This morning’s SNB policy decision followed a much weaker than expected report on industrial production which fell -1.4% q/q. 

The data drives home the point that the Swiss economy is feeling the impact of both a slowing of growth in its major export partners and the impact of a very over-valued CHF.  Given also the deflationary environment, the SNB is still very likely to raise the EUR/CHF ‘floor’ and we continue to favour buying EUR/CHF on dips.  
 

source: Rabobank