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18 Sep 2014
No move to negative rates by SNB a disappointment to markets - RBS
FXStreet (Łódź) - According to the RBS team of analysts, the SNB's decision today to hold monetary policy steady disappointed markets, but an introduction of negative rates could be a shock for the Swiss financial system.
Key quotes
"Negative rates would be counter to their objectives of cooling the housing market, could negatively impact the financial system and are not clearly justified by the economic outlook."
"Nor have the SNB had to defend the floor in two years."
"We expect a continued grind lower in EUR/CHF towards 1.20."
"The SNB will likely intervene in the FX market to prevent a print below 1.20."
"Negative rates could then emerge if FX reserves began to build rapidly."
"But we are not convinced this would be the case, with EUR/CHF declines driven more by broad-based EUR weakness rather than demand for CHF assets."
Key quotes
"Negative rates would be counter to their objectives of cooling the housing market, could negatively impact the financial system and are not clearly justified by the economic outlook."
"Nor have the SNB had to defend the floor in two years."
"We expect a continued grind lower in EUR/CHF towards 1.20."
"The SNB will likely intervene in the FX market to prevent a print below 1.20."
"Negative rates could then emerge if FX reserves began to build rapidly."
"But we are not convinced this would be the case, with EUR/CHF declines driven more by broad-based EUR weakness rather than demand for CHF assets."