Investors Bet SNB Will Soon Cut Its Already Ultra-Low Benchmark

(Bloomberg) --

A Swiss National Bank interest-rate cut appears increasingly likely, with investors seeing a significant chance of a move next month.

The franc has risen to a two-year high against the euro due to concerns about the global economy, and futures for September 2019 on Tuesday priced in roughly 20 basis points of easing. That puts the likelihood of the SNB delivering a 25 basis-point cut in its policy rate -- the conventional size of a move -- at about 80%.

A Bloomberg survey published last week already found the number of economists expecting a rate cut had increased. Since then, the franc touched a 26-month high against the euro, and the euro-Swiss future tumbled.

At -0.75%, the SNB’s deposit rate is the lowest among the Group-of-10 nations. Data suggest Switzerland’s central bank has already stepped up interventions to combat the franc’s strength. A cut to interest rates should help lessen appreciation pressure by addressing the yield spread with the euro area.

The European Central Bank is seen lowering its benchmark next month.

To contact the reporters on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net;Richard Jones in Berlin at rjones207@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow, Zoe Schneeweiss

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