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The Swiss National Bank (SNB) announced its latest monetary policy decision this Thursday and left its sight deposit interest rate unchanged at -0.75%. The decision came as no surprise. The prospect of further falls in the franc should allow the Bank to largely stay out of the FX market, but the policy rate will remain rooted at a record low of -0.75% for the foreseeable future, as reported by Capital Economics.

Key quotes

“The stage is set for further inaction by the SNB over the coming years. SNB Chairman Thomas Jordan couldn’t have been any clearer in saying that there is ‘no signalling at all for a change to monetary policy’. Given the importance that the SNB attaches to maintaining the interest rate differential with the ECB, we expect it to leave its policy rate on hold at -0.75% for the foreseeable future.”

“Although the SNB would intervene to counter any sudden increases in the franc, we expect a further rise in risk sentiment to relieve pressure on the currency franc and allow the Bank to largely stay out of the FX market.”

“We now expect the Swiss franc to fall to CHF 1.12 per euro by year-end (previously CHF 1.10) and to CHF 1.14 (previously CHF 1.12) by the end of 2022.”