Swiss National Bank focuses on “overall currency situation”

At its quarterly assessment in December, the Swiss National Bank (SNB) left its accommodative monetary policy unchanged.

The interest rate on sight deposits with the SNB was maintained at a record low of -0.75% and the SNB reiterated its willingness to intervene again on the foreign exchange market if needed, “taking the overall currency situation into consideration”. This suggests that the SNB might be willing to tolerate a slightly stronger exchange rate against the euro.

In 2017, we do not expect any significant change in the SNB’s monetary policy. FX interventions will remain the policy tool of choice to curb any Swiss franc appreciation.

Our baseline scenario is for the interest rate on sight deposits with the SNB to remain at -0.75% until the end of the ECB’s QE programme or at least until appreciation pressures on the Swiss franc start to fade. We currently expect the SNB to keep its policy rate unchanged in 2017.

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