CHF: ECB left little pressure on the SNB – Danske Bank

Research Team at Danske Bank, notes that as expected, the SNB kept policy measures unchanged in March after the ECB’s easing move being concentrated within the QE/TLTRO sphere left little pressure on the SNB to cut its policy rates further into negative territory.

Key Quotes

“Indeed, with the ECB largely shelving the rates instrument, it is now much less likely to challenge the SNB in its determination to bring EUR/CHF back to the higher levels warranted by fundamentals.

While inflation is not expected to return to positive territory before mid-2017 (and this is conditional on the Libor target maintained at -0.75%), we stress that the SNB will likely reserve its limited options to fight CHF appreciation to tail events such as a Brexit.”