If Swiss franc is too positive, SNB may go negative
Oct 2 (Reuters) -The probability of the Swiss National Bank cutting interest rates below zero next year will increase if EUR/CHF slides through 0.9200 for the first time since the "Frankenshock" of January 2015.
A stronger franc could exert further downward pressure on Swiss consumer price inflation, which slowed to 1.1% year-on-year in August and is forecast to remain at that level when September's print is revealed on Thursday at 0630 GMT.
New SNB Chairman Martin Schlegel said on Tuesday Switzerland's central bank could not rule out the possibility of taking interest rates into negative territory while the risks for Swiss inflation are tilted downwards.
The next SNB interest rate decision is in December, when markets fully price in a fourth consecutive 25 basis point cut, to 0.75%. 0#SNBWATCH
The safe-haven franc rose to a three-week high against the euro on Tuesday, with 0.9335 marking the EBS low for EUR/CHF, on news that Iran would attack Israel. EUR/CHF plumbed a nine-and-a-half year low near 0.9200 in August.
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
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