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UBS Up SNB Terminal Rate View

  • Ahead of the March 23 decision, UBS write that the market's focus will be on rates, the updated inflation forecast and any comments around the balance sheet.
  • They look for a 50bps step in March, but cannot exclude a 75bps move given the surprise in June last year.
  • They also add 25bps to their terminal rate view, seeing 1.75% in June (with a risk of 2.00%) due to the increased expectations for ECB policy and the implied ECB-SNB rate differential.
  • On the balance sheet, they write that they expect FX interventions to be increasingly be used after an estimated CHF30bln in sales across Q4 and CHF 8bln across January.
  • Lastly, they see SNB tweaking their tiering framework by increasing remuneration of sight deposits above the threshold to 1.00% from 0.50%.
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