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Goldman Sachs: Sees hiking to terminal rate of 1.50% next year

SNB
  • While we had flagged a strong possibility of a hike, the 50bp magnitude was a surprise to both us and market expectations.
  • The SNB also adjusted its language on potential currency intervention by dropping the one-sided commitment to guard against currency depreciation, implicitly signalling the potential for foreign asset sales to further strengthen the Franc.
  • Given the SNB's hawkish surprise today, we now look for three further 50bp hikes in September, December and March next year, followed by one further 25bp hike in June of next year for a terminal rate of 1.50%.
  • Given the SNB's preference for tightening the monetary stance through the policy rate rather than the balance sheet, we expect the SNB to only gradually unwind its asset holdings, without a pre-announced path.
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  • While we had flagged a strong possibility of a hike, the 50bp magnitude was a surprise to both us and market expectations.
  • The SNB also adjusted its language on potential currency intervention by dropping the one-sided commitment to guard against currency depreciation, implicitly signalling the potential for foreign asset sales to further strengthen the Franc.
  • Given the SNB's hawkish surprise today, we now look for three further 50bp hikes in September, December and March next year, followed by one further 25bp hike in June of next year for a terminal rate of 1.50%.
  • Given the SNB's preference for tightening the monetary stance through the policy rate rather than the balance sheet, we expect the SNB to only gradually unwind its asset holdings, without a pre-announced path.