Meanwhile, the Swiss National Bank unexpectedly executed its first hike in 15 years this month as inflation rises. Goldman Sachs believes that the “hawkish surprise” could be just the beginning, forecasting a rate increase to 1.5 percent by this time next year, from the current -0.25 percent, starting from the meeting in September.
– This is exactly what the SNB was looking for when it raised rates – said Jordan Rochester, currency strategist at Nomura in London. “The SNB knew it would have a greater impact on the CHF than other central banks that have risen due to their initial position and financial outflows that have accumulated over the years and could slowly start to return.”
The Franc was the only currency in a group of 10 that strengthened against the Dollar this month.
– The market speculates that in an inflationary environment, there is less risk that the SNB will intervene to weaken the CHF – said Jane Foley, head of FX strategy at Rabobank in London. “However, there is a risk that the SNB could use its foreign exchange intervention tool to stabilize the exchange rate, as large movements in the exchange rate will still be undesirable.”
