CHF: Lining up for another SNB rate cut – SocGen

By FXStreet FXStreet (Delhi) – Research Team at Societe Generale, suggests that the SNB next meets on 10 December, one week after the ECB and it may choose to cut interest rates, renew its commitment to FX intervention, or buy more non-Franc securities, including equities.

Key Quotes

“Eleven months ago, the SNB pre-empted the launch of the ECB’s expanded asset purchase programme by cutting interest rates into negative territory. In one month’s time, on 10 December and only one week after the next ECB meeting of 3 December, money markets expect the SNB to cut interest rates again to -1.00%. The largest increase in SNB FX reserves in October since July suggests the central bank is anticipating further ECB action and has already stepped up currency intervention to counter EUR/CHF depreciation below 1.0750.”

“The franc is still markedly overvalued – around 11% in real terms – so there is a case for the SNB to leave its monetary policy as accommodative as it is and hope for a rebound in the EUR to bring back the franc closer to fair value in order to lift inflation. However, a litany of ECB speakers over the past few weeks have made it clear that there is a …read more

Source:: FX Street