Economists at Credit Suisse see upside risks to the current markets’ Swiss National Bank (SNB) policy rate pricing. Thus, EUR/CHF is set to move downward.

Upside risks to the SNB’s policy rate

“We lowered our end of Q4 EUR/CHF target from 0.9400 to 0.9000 and consider this view invalidated above 0.9955 (down from 1.0060 previously). The risks to this view are that the SNB will significantly fall behind the ECB’s rate hiking cycle and a decline in inflation rates abroad.”

“We expect the SNB to continue its rate hiking cycle and see upside risk to the current markets’ policy rate profile. The SNB currently forecasts inflation of 3.0% for 2022, 2.4% for 2023 and 1.7% for 2024. Based on these projections, we believe the real policy rate is not in restrictive territory yet.”