The Swiss kept rates on hold today even though the economy is doing very well there and beating all expectations. This is not surprising for two reasons. First the Swiss Franc has appreciated against the Euro which was a key reason to raise rates before to attract capital and lower inflation on products imported to Switzerland from the Euro area. Second the turmoil from the debacle I described in the daily commentary is also affecting the major Swiss banks as well and the SNB is trying to accommodate them also. You could also argue that growth will slow due to decreased demand from key trading partners and the appreciation of the Franc in the coming quarter. Although the one thing that all these central banks seem to parrot (possibly in the hopes that speculators will listen) is that commodity prices should fall soon. Given the fact that commodities are priced in dollars and the dollar is no where done crashing this is a completely unfounded statement. Once these commodities are priced in something else like Euros this scenario becomes much more likely.
