SNB To Continue Cutting Rates

February 18, 2015 Share Print 0

The Swiss National Bank will cut interest rates again in an effort to head off economic damage from the franc’s surge after scrapping its currency cap, according to a survey.Twenty-six of 28 economists in Bloomberg’s monthly survey forecast that SNB will loosen policy if the economy weakens following its shock decision to give up the franc ceiling in January. Forecasts collected by Bloomberg show a gloomier outlook with growth expected to slow through June of this year. Twenty-two of the respondents see the SNB cutting the rate on sight deposits, currently at minus 0.75 percent, in tandem with a reduction in the benchmark interest rate.

SNB President Thomas Jordan, who has indicated that there’s room for a further rate cut, predicts that Swiss economic growth will lose pace, and the economy may even shrink in one quarter. Economists in the survey share that view, forecasting a contraction in the three months through June.

“Switzerland has to avoid an all-out sharp recession and deflation,” said Janwillem Acket, chief economist at Julius Baer Ltd. in Zurich, who predicts growth of at least 0.3 percent every quarter this year. At the same time, Acket argues that the deposit rate could go as low as minus 5 percent. “Never say never — we live in times where nothing is impossible.”

via Bloomberg

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.