SNB rate decision and statement now out 15 Marc

  • sight depo -0.75%
  • 3mth LIBOR lower range -1.25%
  • 3mth LIBOR upper range -0.25%

Rate hold as expected.

  • Swiss franc remains highly valued
  • will remain active in FX market as necessary while taking the overall ccy situation into consideration
  • situation in fx market is still fragile and monetary conditions may change rapidly
  • will continue to monitor real estate market closely
  • expects continued GDP of 2% in 2018 and further gradual decrease in unemployment

  • 2018 Inflation Seen at 0.6% vs 0.7%

  • 2019 Inflation Seen at 0.9% vs 1.1%

  • 2020 Inflation Seen at 1.9%

No real change in rhetoric there but slightly softer inflation forecasts and CHF pairs suitably unfazed. USDCHF 0.9455 EURCHF 1.1687

I regularly highlight the SNB helping to underpin USDCHF and hence EURCHF. They have a long USDCHF exposure in fx reserves which is costing them dearly down here at 0.9400 and they will not want it to go much lower hence their defence recently between 0.9300-30 and above.

Says the SNB:

  • The Swiss National Bank (SNB) is maintaining its expansionary monetary policy, with the aim of stabilising price developments and supporting economic activity. Interest on sight deposits at the SNB is to remain at -0.75% and the target range for the three-month Libor is unchanged at between -1.25% and -0.25%. The SNB will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration.
  • Since the last monetary policy assessment in December, the Swiss franc has appreciated slightly overall on the back of the weaker US dollar. The Swiss franc remains highly valued. The situation in the foreign exchange market is still fragile and monetary conditions may change rapidly.
  • The negative interest rate and the SNB's willingness to intervene in the foreign exchange market as necessary therefore remain essential. This keeps the attractiveness of Swiss franc investments low and eases pressure on the currency.

Full statement here

More of the same from Jordan & Co