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SNB leaves policy rate unchanged at -0.75 percent


SNB announces its latest monetary policy decision – 19 September 2019

SNB leaves policy rate unchanged at -0.75%
  • Sight deposits rate unchanged at -0.75%
  • Willing to intervene and will remain active in FX market as necessary
  • Expansionary monetary policy continues to be necessary
  • Trade tensions could further hurt global economic mood
  • Franc remains highly valued
  • 2019 GDP forecast at 0.5% to 1.0%; previously 1.5%
  • 2019 inflation forecast at 0.4%; previously 0.6%
  • 2020 inflation forecast at 0.2%; previously 0.7%
  • 2021 inflation forecast at 0.6%; previously 1.1%


The notable thing in the decision here is that the SNB has tweaked its basis for interest on deposits. To be more clear, they adjusted the basis for calculating negative interest on sight deposits that are held with the central bank.

The negative interest will continue to be charged on the portion of banks’ sight deposits, which exceeds a certain exemption threshold. However, the threshold will be updated monthly now to try and reflect developments in banks’ balance sheets over time.

It’s not a really a relevant change in terms of monetary policy and the downgrades to the inflation and growth forecasts are certainly dovish but fits in line with overall developments seen domestically and globally as of late.

That said, the SNB doesn’t seem ready to move yet and with limited market intervention (as seen in sight deposits data) over the past few weeks, it suggests that there is room for the franc to roam still before they step in.

The franc has strengthened on the decision here with EUR/CHF down to 1.0975 while USD/CHF is down to 0.9939 currently.

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