The Swiss National Bank (SNB) left policy rates unchanged, no surprise. It expects a weaker CHF over time, something that is also needed to support growth and to bring inflation closer to target. More easing from the ECB would probably prompt easing from the SNB. Expect a higher EUR/CHF in the near term.

The target range for the 3-month Libor remained at -1,25% to -0.25%, the deposit rate at -0.75%. The Swiss Franc is still considered  significantly overvalued and the SNB repeated its willingness to intervene on the foreign exchange market to weaken the CHF if needed.

On the global economy, the SNB is cautiously optimistic, but also sees significant risks like China and structural weaknesses in Europe. On the domestic side, the SNB will continue to monitor developments on the mortgage and real estate markets closely. Accordingly, it will regularly reassess the need for an adjustment of the countercyclical capital buffer."

In an environment of slow growth, negative inflation and an significantly overvalued currency, monetary policy in Switzerland continues to be driven by exchange rate considerations.

"We think that currency intervention is the preferred instrument against a possible strengthening of the CHF. Further easing by the ECB would make the SNB ease, too. We don't expect the SNB to re-introduce a minimum exchange rate any time soon. In our view, the SNB is more comfortable with the current flexible approach', says Nordea Bank.