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SNB Expected to Keep Franc Cap until 2016

The Swiss National Bank is likely to keep its cap on the franc in place until at least 2016 as central bankers in the surrounding euro area loosen policy further, economists say.

Eighteen of 21 economists in the Bloomberg Monthly Survey say the SNB won’t give up its minimum exchange rate of 1.20 per euro this year or next. Just three predict an exit from the measure in 2015.

The Swiss central bank, based in Bern and Zurich, set the cap three years ago to ward off deflation after investor concern pushed the franc nearly to parity with the euro. The European Central Bank’s introduction of a negative deposit rate and announcement of plans to buy asset-backed securities has lifted the franc against the euro in recent months, intensifying speculation that the SNB could again wage currency interventions or enact its own deposit charge.

Bloomberg [1]

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