UBS Predicts SNB Will Cut Policy Rate to 0.25% in March

UBS analysts predict that the Swiss National Bank (SNB) will lower its policy interest rate by 25 basis points to 0.25% in March. According to UBS's preview of the SNB, this adjustment is expected to be the last rate cut in the current series of monetary policy changes.

While there is a possibility of the policy rate dropping to 0% or into negative territory, UBS emphasizes that these scenarios are not the main expectation. Analysts note that even with a policy rate of 0.25%, some banks may still be exposed to negative interest rates under the current gradual pricing framework. The potential effects of this rate cut could lead to a reassessment of the discount factor between the SNB's upper and lower pricing rates. UBS suggests that if the SNB were to lower the policy rate to 0%, it would likely come with more significant changes to the gradual system. Additionally, there may be changes in the availability of SNB bonds and trading in the Swiss Average Rate Overnight (SARON).

This article has been generated with the support of artificial intelligence, translated, and reviewed by an editor. For more information, please refer to our Terms and Conditions section.