Martin Schlegel, Vice Chairman of the Governing Board, sees increasing signs that inflation is spreading to other goods and services that are not related to energy and supply shortages.

Even though inflation eased to 2.2% in May (from 2.6%), the SNB still seems to be concerned about second-round effects. 

I would weigh Schlegel’s comments stronger than the May inflation data. 

A rate hike in two weeks’ time to then 1.75% is likely to be a fait accompli. The market sees the likelihood that key rates in Switzerland might even rise to 2%. As long as there is no indication that these expectations are too high, the Franc is likely to remain strong against the Euro.