SNB on Hold Until 2027: Implications for CHF and USD/CHF

The Swiss National Bank (SNB) may keep its policy rate at 0.00% until the end of 2027, according to a Bloomberg source story.

This forecast aligns with ING's own prediction and could entrench underperformance in the Swiss Franc (CHF) when global interest rates rise on higher oil prices.

The report suggests that investors may increasingly fund out of Swiss francs rather than the yen, as funding out of Swiss francs is cheaper and avoids the risk of the Bank of Japan intervening to the tune of $70bn.

ING's Chris Turner notes that Switzerland's low rate environment has made USD/CHF a popular vehicle to express hawkish Fed views. If the Fed were to hike rates, USD/CHF could reach 0.85 in August.