June 17, 2022 16:20 GMT
- In a stark contrast to consensus expectations, SNB raised its policy rate 50bp, to -0.25%; the first rate hike since 2007.
- Not only did it hike rates and signal more rate hikes to come, but it also removed the reference to the CHF being “highly valued” and now says it sees currency interventions as two-sided. It said it would intervene against both excessive appreciation and CHF weakness, a stark departure from its long-standing battle against CHF strength.
- We continue to think the SNB following the ECB on policy normalisation will keep money supply differentials (a key driver of EUR/CHF) contained.