MNI PREVIEW: SNB To Hold, May Express Franc Concern

By Luke Heighton

     FRANKFURT(MNI) - The Swiss National Bank is likely to hold rates on pause

at its autumn monetary policy assessment Sept. 19, despite last week's European

Central Bank easing package, but investors will watch to see if it signals any

moves to weaken the franc.

     Here are key points to look out for:

     --A recent pause in the SNB's foreign exchange interventions suggests they

may hold rates at current levels for the time being, leaving space for further

cuts should the need arise - possibly in 2020.

     --The SNB could adjust the language it uses to assess the strength of the

franc , from "highly valued" in June to "overvalued." If so, Chairman Thomas

Jordan could once again describe the situation as "fragile" and reaffirm the

SNB's willingness to weaken the currency via FX markets if needs be.

     --Jordan will again highlight the economy's need for monetary support,

while emphasising the presence of pronounced downside risks, most notably

political uncertainty and trade tensions, and is likely to repeat his assertion

that any renewed turbulence in the financial markets, further dampening of

economic sentiment or unexpectedly sharp slowdown internationally will quickly

spread to Switzerland.

     --Recent confirmation - first from Christine Lagarde speaking in Brussels,

then from Mario Draghi in Frankfurt - that the ECB is to conduct a review of

monetary policy strategy will have been met with interest in Switzerland, but

not surprise, and is unlikely to have provoked many reformist impulses.

     --For all that the ECB's decision to ease monetary conditions still further

may create short-term tensions for the SNB, policymakers will be hoping that the

package of measures announced last week will give rise to the euro area growth

on which Swiss hopes of eventually raising rates depend.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: MT$$$$,MX$$$$]