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SNB: We expect more rate cuts - Rabobank

FXStreet (Córdoba) - Today the Swiss National Bank (SNB) decided to leave rates unchanged and reiterates that the Swiss franc remains overvalued. According to analysts from Rabobank the central bank will cut rates during 2016.

Key Quotes:


“Although the Swiss economy has averted a recession, the export sector is still in the doldrums and inflation has declined in recent months, in part because the SNB decided to discontinue defending the floor, but also because of the sharp fall in oil prices and other commodities.”

“During the press conference Thomas Jordan said that the SNB won’t exclude another rate cut, but that it carries side effects. Going forward we expect the SNB to cut rates, probably as early as March or June 2016.”

In the meantime we expect the SNB to monitor the EUR/CHF currency pair closely and step in if necessary via additional FX purchases. This could probably be already around the 1.06-1.07 level. The SNB hasn’t been very active in this market for a few months, given that sight deposits have stabilized. We estimate that it could buy another CHF50 billion over the course of next year as political risks will grow when the balance sheet will expand further.”

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