ZURICH (Reuters) – The Swiss National Bank is likely to keep its policy interest rate at minus 0.75% until the end of 2021 at least, according to economists polled by Reuters.
All 34 analysts surveyed June 12-16 expected the central bank to stick to its current policy rate – the lowest in the world – when it gives its monetary policy assessment on Thursday.
Some did not expect any change until late 2025, as the SNB faces the high value of the Swiss franc, deflationary risks and sluggish economic growth caused by the coronavirus pandemic.
They also unanimously expected SNB Chairman Thomas Jordan to keep the interest rate on sight deposits, used to put a brake on the franc’s rise, at -0.75%.
“It is likely the SNB will repeat its message that it is committed to doing whatever is necessary to prevent the rise of the franc, including repeating their readiness to cut interest rates if needed,” said GianLuigi Mandruzzato, an economist at EFG Bank.
“It will take much longer to get out of negative interest rates now than we ever thought before.”
Although the Swiss franc rose in May to its highest against the euro since July 2015, the safe-haven currency has since weakened against the single currency, giving the SNB some breathing space.
Instead of cutting rates, analysts expect the SNB to continue with the currency interventions it has already ramped up this year, along with increased verbal warnings about its possible actions.
“It will be a boring meeting, but after all the recent turbulence boring is good,” said UBS economist Alessandro Bee.
“We don’t see any change in the next 12 months, the SNB will prefer to keep intervening, which they can turn on and off as necessary.”
(Writing by John Revill; polling by Richa Rebello and Sujith Pai; editing by Jonathan Cable, Larry King)