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Thursday, August 15, 2013

SNB - Danthine - Says Rate Hike would Lead to Eliminating Cap - Zinserhöhung wird 1.20er Limite kippen

Author thomas ramseyer
fxstreet: Jean-Pierre Danthine, the Swiss National Bank Vice President has indicated that the central bank will abolish the ceiling on the franc when it starts raising interest rates.

1) The rate hike will take place when the demand for EUR picks up.

1.1) SNB will be FORCED to buy CHF against selling strongly demanded EUR.

2) Demand for EUR will be based NOT on the recovery of the economies BUT on the Government Debt related to GDP.

3) Selling EUR leads to downsizing the central bank moneymonetary aggregates as well as the sight deposits of the domestic banks. This will lead to higher short term rates.

3.1) Thus SNB will follow the market; it will be forced to restate rising short term interest rates.

copyright thomas ramseyer

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