Nomura sees the SNB returning to negative rates in the next quarter | Forexlive

This was always going to be the danger when the SNB sought to cut interest rates to 0.25% just before the whole tariffs/trade war blew up in the past two months. In its latest note, Nomura is now forecasting two more 25 bps rate cuts by the SNB this year. That opposed to their previous call of no further rate cuts after the move in March.

The firm expects the central bank to take action in order to try and quell the strength of Swiss franc. As things stand, analysts at Nomura are already estimating the real effective exchange rate to be at its highest since 2008 and further ECB rate cuts and continued economic uncertainty from US tariffs will only threaten to drive further franc strength. That unless the SNB steps in to take some action at least.

As such, they see the SNB taking decisive action to cut in both the June and September meetings. And that will bring back the negative interest rate experiment. If so, that will be the end of the Covid reset for Switzerland.

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