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Bloomberg
The franc may be close to the Swiss National Bank’s previous currency ceiling, but that doesn’t mean investors should expect an interest rate hike too soon.
A monthly survey of economists shows they anticipate the Swiss central bank will keep its deposit rate at minus 0.75 percent the first nine months of 2019, before raising it by 25 basis points in the final quarter. That would be the first increase since 2007.
The SNB has pursued an ultra-loose monetary policy for years with a view of taking pressure off the franc and to keep deflationary risks at bay. In response to the European Central Bank’s quantitative easing program, the Swiss central bank has used a two-pillar approach consisting of a negative deposit rate of minus 0.75 percent and a pledge to intervene in currency markets since early 2015.
The franc hit 1.19 per euro and is now trading just shy of the 1.20 mark at which the SNB had its minimum exchange rate until January 2015. Still, SNB President Thomas Jordan said in a newspaper interview published last week that he doesn’t want to “provoke†an appreciation of the franc and it’s too early for a change to monetary policy.