ZURICH (Reuters) - The Swiss National Bank will leave its ultra-loose policy alone on Thursday, said all the economists polled by Reuters, and most don't expect any change until at least 2021.
All 32 economists polled by Reuters expect SNB Chairman Thomas Jordan to maintain the bank's negative interest rates and readiness to intervene in currency markets to restrain the safe-haven Swiss franc.
They expect the SNB to keep its target range for the London Interbank Offered Rate (LIBOR) locked at -1.25 to -0.25 percent, the same level since it ditched its minimum exchange rate of 1.20 Swiss francs to the euro four years ago.
None of the respondents expect any change until the end of this year, especially in view of the European Central Bank's slowing of its own policy normalization. Most forecast it will come in 2021 at the earliest.
"We do not expect the SNB to change interest rates before the end of 2020. In fact, if we are correct in our assessment that the ECB will be forced to re-start QE next year, upward pressure on the franc – and SNB concerns about deflation – are likely to intensify into 2020," said Jack Allen at Capital Economics.
"This means the SNB may have to delve into its toolbox to ease policy next year," Allen said. He thinks the SNB might take rates even further into negative territory if necessary.
There was also no disagreement about the negative interest rate the SNB charges on sight deposits. All the economists expect -0.75 percent to be maintained this week.
All but one expected the bank to retain its description of the franc as "highly valued". That one expected it will be described as "significantly overvalued". The franc has gained 3 percent against the euro in the last 12 months to trade around 1.1360.
A strong franc weighs on Switzerland's export-reliant economy and also adds deflationary pressure. The SNB is expected to cut its 2019 inflation forecast on Thursday from its current view of 1 percent.
The SNB will have to wait at least until the ECB starts its monetary policy tightening -- now delayed to 2020 at the earliest -- before it begins its own path to normalization, analysts said.
"Pressure on the SNB is mounting from two sides: on the one hand, the financial industry and pension funds are increasingly coming under pressure, which puts pressure on the SNB to end the negative interest rate phase as early as possible," said Alessandro Bee at UBS.
"On the other hand, the weakness in European growth and the various political risks lead to a higher risk of a Swiss franc appreciation. The SNB is between a rock and a hard place."
