More Currency Wars: Swiss Central Bank Poised to Cut Interest Rate to -1.0%


The Swiss national bank is not happy with appreciation of the Franc. Its solution is likely another rate cut to -1.0%.

Bloomberg reports SNB Likely to Follow Interventions With Interest-Rate Cut.

The Swiss National Bank may have to do more than pump billions into foreign exchange markets into prevent the franc from appreciating to a damaging level.

With data suggesting the central bank recently intervened after the currency rose to the highest since 2017 against the euro, an increasing number of economists also expect the SNB to reduce its benchmark interest rate. Five respondents of 17 in Bloomberg’s monthly survey now see a cut of up to 25 basis points this quarter, compared with just one in July.

With the franc up more than 4% versus the euro in the past three months and the European Central Bank expected to unleash new stimulus, the SNB is under close scrutiny for possible action it will take to contain the currency’s strength. Sight deposits jumped almost 2.8 billion francs last week, the most in more than two years and a sign the central bank has been intervening in currency markets.

Stronger Currencies, Who Want's Em?

  1. Argentina
  2. Venezuela
  3. Turkey
  4. Iran
  5. Colombia

Anyone else?

Well, I am sure there are some other minor counties like Sudan or Uganda. Perhaps Mexico or Russia.

Monetary Madness

Meanwhile, prepare for an escalation of the currency war and more Monetary Madness such as Inverted Negative Yields in Germany and Negative Rate Mortgages.

Also, please see Fed Trapped in a Rate-Cutting Box: It's the Debt Stupid

And expect more howls from Trump.

Mike "Mish" Shedlock

Comments (10)
No. 1-6

Someone needs to go to negative 10%. Let's stop these small incremental cuts and get MMT really moving. I'm not borrowing and leveraging up (consuming) until -10%. That's the rate I want for my next mortgage! It's an insane world!


And Gold isn't at $2000/oz yet?


To win the 2020 election, Trump could simply pick a Fed chairman who will implement a policy of negative mortgage for everyone.


Someone who borrowed Euros and purchased Swiss Francs three months ago made 4%. If a currency speculator only put up 10% of their own money on that trade, they had a ROI of 40% in three months! In that context, negative 1% does not seem like much of a deterrent. I think the SNB just wants to charge a higher vig on EUR/CHF speculators as Brexit nears.


The new negative normal.


If a CB really wanted to devalue its currency, all it has to do is give me the chance to get a very large negative interest rate loan. I would be happy to pay the interest up front as part of the deal, and the bigger the loan the better.

Global Economics