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SNB: Lower Threshold Factor May Cause S/T Gyrations, But Neutral Longer-Term

SNB
SNBCentral Bank NewsSwitzerlandCEEMEABulletMarketsFixed Income BulletsForeign Exchange Bullets

The Swiss National Bank have further lowered the threshold factor above which banks are paid the full SNB policy rate, down to 20, from 22 previously. This level stood at 25 earlier in 2024. 

  • The Bank write that the "basis for calculating the threshold remains unchanged" and that the lower threshold factor "counteracts the increase in thresholds due to the raising of the minimum reserve requirement as of 1 July 2024". As such, the policy move maintains the effectiveness of the transmission mechanism and "has no impact on the current monetary policy stance".
  • While the policy step is a net neutral, the switch may cause some short-term gyrations in money markets. Unusually, this decision did not come alongside last week's policy rate decision - but a standalone tweak released this morning.
  • SARON futures had been bid from the open, with Jun25 - Mar26 SARON futures crossing 100.00 for the first time. 
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The Swiss National Bank have further lowered the threshold factor above which banks are paid the full SNB policy rate, down to 20, from 22 previously. This level stood at 25 earlier in 2024. 

  • The Bank write that the "basis for calculating the threshold remains unchanged" and that the lower threshold factor "counteracts the increase in thresholds due to the raising of the minimum reserve requirement as of 1 July 2024". As such, the policy move maintains the effectiveness of the transmission mechanism and "has no impact on the current monetary policy stance".
  • While the policy step is a net neutral, the switch may cause some short-term gyrations in money markets. Unusually, this decision did not come alongside last week's policy rate decision - but a standalone tweak released this morning.
  • SARON futures had been bid from the open, with Jun25 - Mar26 SARON futures crossing 100.00 for the first time.