chf fundamentals

Just one minute after the BOE cut rates on Thursday, the Swiss National Bank (SNB) surprisingly came in with a 50 basis point reduction to their 3-month LIBOR target rate, bringing it down to a nearly 2-year low of 2.00 percent.

Since the SNB had not been scheduled to meet again until December, their rate cut indicates that this was part of a coordinated effort with the other European central banks. In a press release following the rate decision, the SNB said that they adjusted monetary policy in light of the worse-than-expected deterioration of the global economic outlook and lower inflation forecasts, given the drop in oil and appreciation of the Swiss franc. Their discussion of the currency, which they will “keep a close watch on”, suggests that they are somewhat concerned about its ascent and if these moves continue, may signal potential for a coordinated currency intervention on low-yielding currencies in coming months. Credit Suisse overnight index swaps are not updated frequently for the SNB, but I anticipate that they will follow the lead of the ECB going forward.

Related Article: Forex Market Impact Of European Central Bank And Bank Of England Rate Cuts

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