SNB likely to take a pause – RBS

FXStreet (Delhi) – Melinda Burgess, Research Analyst at RBS, suggests that there is less pressure on the SNB to ease policy further this week following the ECB’s less aggressive package.

Key Quotes

“With some of the heat drawn from the European currency wars post the ECB decision, the SNB may now feel more comfortable keeping policy unchanged. Swiss data has been softer than expected and growth stalled in Q3 as the economy continues to adjust to a stronger CHF.”

“However, domestic demand has held up relatively well and the economy has weathered the stronger CHF this year better than feared. Still, the SNB considers the CHF overvalued and softer inflation in November underlines the SNB’s need to help weaken the currency.”

“Hence, while we do not expect a rate cut this week, the SNB is likely to reaffirm its ‘two-pronged monetary policy approach’ of negative interest rates and a readiness to intervene in FX markets. Risks of easier policy from the SNB next year remain if CHF appreciation starts to pick up.”

Melinda Burgess, Research Analyst at RBS, suggests that there is less pressure on the SNB to ease policy further this week following the ECB’s less aggressive package.

(Market News Provided by FXstreet)