SNB to dive deeper into negative rates
|Investors expect the Swiss National Banks (SNB) to cut its deeply negative interest rates in response to an increasingly expansive mood at the European Central Bank (ECB).
On Wednesday, money markets were pricing a 54% probability of SNB reducing its benchmark rate of -0.75% — already one of the lowest in the world — by 25 basis points by September, according to Reuters.
The probability for a cut by December stood at 72% on Wednesday, up from 62% observed on Tuesday.
The SNB may feel pressured to ease rates with the EUR/CHF pair currently trading at 1.0967, the lowest level since July 2017.
The Swiss Franc (CHF) may rise even further if the European Central Bank sends out a strong dovish message later today, forcing markets to price in the possibility of aggressive rate cuts in the near future.That would further ramp up pressure on the SNB to act.
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