There is tail risk to CHF strength if risk aversion becomes the main global FX theme. This upside risk would be driven by geopolitical concerns, rather than the SNB policy stance.

Assuming that risk appetite normalises, we expect underperformance in the future on the view that the SNB has finished its hiking cycle. We think the sharp decline in measures of underlying inflation, such as the median inflation rate, will make the SNB cautious about further hikes. 

We doubt that the SNB now sees a strong CHF as necessary in the inflation fight, but we also doubt that it will push back hard against safe-haven capital inflows.