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Jun 21 - 02:55 PM

Danske: SNB to Refrain from Near-Term FX Intervention Amid Policy Rate Cut

By eFXdata  —  Jun 21 - 01:30 PM


Danske Bank expects the Swiss National Bank (SNB) to refrain from near-term intervention in the foreign exchange market following its recent policy rate cut. The SNB's cautious stance is likely influenced by its revised inflation forecast and the upcoming French elections.

Key Points:

  1. Policy Rate Cut:

    • The SNB cut its policy rate by 25bps to 1.25%, aligning with expectations.
    • The inflation forecast was revised lower, with the SNB noting that without the rate cut, the forecast would have been even lower.
    • The SNB reiterated its commitment to monitor inflation closely and adjust monetary policy as necessary.
  2. FX Intervention Stance:

    • The SNB remains open to intervening in the foreign exchange market if necessary.
    • While SNB President Thomas Jordan indicated no specific preference for intervention direction, Danske believes the bias is towards weakening the CHF.
    • The SNB's cautious approach suggests it will stay sidelined with FX interventions for the time being.
  3. Influence of Risk Sentiment and French Elections:

    • CHF performance is currently tied to overall risk sentiment and the upcoming French elections.
    • EUR/CHF tracked higher following the SNB's rate cut, reflecting market reactions to the central bank's actions and broader risk factors.
  4. Future Policy Rate Expectations:

    • Danske expects the SNB policy rate to end the year at 1.00%.
    • The recent meeting highlighted the frontloaded nature of the SNB's approach but did not significantly alter the long-term policy outlook.


Danske anticipates the SNB will maintain its current policy rate at 1.25% in the near term, refraining from immediate FX intervention. The SNB's future actions will likely be influenced by broader risk sentiment and the outcome of the French elections. Investors should monitor the upcoming Q1 data on FX intervention, set to be released on 28 June, for further insights into the SNB's potential market activities.

Danske Research/Market Commentary


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