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Charlotte de Montpellier, Economist at ING, notes that the Swiss National Bank maintained the target range for the 3-month Libor between -1.25% and -0.25% and the interest rate on sight deposits was left unchanged at -0.75%.

Key Quotes

“The SNB reiterated its willingness to intervene if needed in foreign exchange markets to prevent an appreciation of the Swiss franc. The central bank still believes the franc is “highly valued”. It insisted on the appreciation of the franc over the past three months and believes the situation on the foreign exchange market is still fragile.”

“The SNB is in a tricky situation with some very strong growth indicators but it also has concerns about the global external environment which could impact the domestic market and CHF valuation.”

“Although the situation is really favourable for the Swiss economy, the central bank remained very cautious. According to the SNB, “the risks to the positive baseline scenario are more to the downside”.”

“We don’t expect any hikes before the ECB starts to do the same. Given the ECB isn’t expected to hike before the end of the summer of 2019, we think the SNB won’t hike interest rates before December 2019.”

“Moreover, given the increased risks context expected for next year, it’s even possible that the first rate increase will be postponed towards 2020.”