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SNB leaves policy rate unchanged at -0.75%

  
  Analysis
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SNB announces its latest monetary policy decision – 18 June 2020

  • Prior -0.75%
  • Sight deposit interest rate unchanged at -0.75%
  • Remains willing to intervene more strongly in the FX market
  • Will remain active in the FX market as necessary
  • Swiss franc remains highly valued
  • Sees inflation this year at -0.7%, 2021 at -0.2%, 2022 at +0.2%
  • Anticipates that there will only be a partial recovery for the time being
  • Estimates that overall GDP is likely to contract by 6% this year
  • Full statement
Pretty much as good a non-event as can get as the SNB keeps policy unchanged and maintained that they will keep intervening strongly to limit the appreciation of the Swiss franc – as they have been doing over the past few months already.
They revised lower their inflation outlook, which reaffirms the notion that monetary policy is going to stay accommodative as it is now for the next few years at the very least.

SNB leaves policy rate unchanged at -0.75%

  
  Uncategorized
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SNB announces its latest monetary policy decision – 12 December 2019

  • Prior -0.75%
  • Sight deposits rate unchanged at -0.75%
  • Remains prepared to intervene in markets if needed
  • Risks to the global economy remain tilted to the downside
  • Franc remains highly valued; FX market remains fragile
  • Willing to intervene in FX market as necessary, while taking overall currency situation into consideration
  • Negative rates and willingness to intervene should counteract attractiveness of the franc and ease upward pressure on the currency
  • 2019 GDP forecast seen at around 1.0% (previously 0.5% to 1.0%)
  • 2020 GDP forecast seen between 1.5% to 2.0%
  • 2019 inflation forecast seen at 0.4% (unchanged)
  • 2020 inflation forecast seen at 0.1% (previously 0.2%)
  • 2021 inflation forecast seen at 0.5% (previously 0.6%)
No key changes by the SNB in their language as they continue to keep rates well in negative territory and reiterated that the Swiss franc remains “highly valued”.
Despite mounting skepticism over its negative rates policy, it doesn’t look like it will come to an end any time soon although the pressure on lenders and the public may still keep the central bank sidelined further for the time being.
That said, if trade risks materialise and the global economy suffers a more profound slowdown next year, it’s only a matter of time before they will have to step in and take action.

Tim Backshall On Europe: "Default Now Or Default Later" As EuroStat Complains That Greece Is Still Withholding Critical Data

  
Analysis, Economy, Education
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There is one major problem with putting houses of card back together – they tend to fall…over and over. And while abundant liquidity in May and June served as an artificial prop to return European core and PIIGS spreads to previous levels merely as mean reversion algos took holds, the second time around won’t be as lucky. CDR’s Tim Backshall was on the Strategy Session today, discussing the key trends in sovereign products over the past few months, noting the declining liquidity in both sovereign cash and derivative exposure (we will refresh on the DTCC sovereign data later after its weekly Tuesday update). Yet the most interesting observation by Backshall is the declining halflife of risk-on episodes, which much like the SNB’s (now declining) interventions, are having less of an impact on the market, as ever worsening fundamentals can only be swept under the carpet for so long before they really start stinking up the place, and indeed, as Tim points out at 5:30 into the interview, even the IMF now realizes that soon the eventual second domino will fall, and it is better the be prepared (via the previously discussed infinitely expanded credit line), than to have to scramble in the last minute as was necessary in May. In other words, the storm clouds are gathering and only fools will invest in risk asset without getting some additional clarity on what is happening in Europe. The bottom line as Backshall asks is: “do they default now or default later.” And that pretty much sums it up. Buy stocks at your own peril.

Incidentally all this is happening as we read in an exclusive Bloomberg piece that “four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt” and that EuroStat still has not received the required disclosure about just how fake (or real) the Greek debt situation truly is. When one steps back and ponders just how bad (and unknown) the situation in Europe is, and that stocks are unchanged for the year, one must conclude, as Dylan Grice does every week, that the lunatics have truly taken over the asylum.

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