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The Swiss National Bank may have to do more than pump billions into foreign exchange markets into prevent the franc from appreciating to a damaging level.

With data suggesting the central bank recently intervened after the currency rose to the highest since 2017 against the euro, an increasing number of economists also expect the SNB to reduce its benchmark interest rate. Five respondents of 17 in Bloomberg’s monthly survey now see a cut of up to 25 basis points this quarter, compared with just one in July.

With the franc up more than 4% versus the euro in the past three months and the European Central Bank expected to unleash new stimulus, the SNB is under close scrutiny for possible action it will take to contain the currency’s strength. Sight deposits jumped almost 2.8 billion francs last week, the most in more than two years and a sign the central bank has been intervening in currency markets.

UBS Group AG, Raiffeisen Bank International AG and Bank J. Safra Sarasin are among the institutions now predicting the SNB will follow with a cut, even though the benchmark is already the world’s lowest at -0.75%. While the next policy meeting isn’t until Sept. 19, the central bank could act at any time depending on the franc. It has a habit of springing surprise announcements, and hasn’t actually moved interest rates at a scheduled meeting since 2009.

The franc stood at 1.08561 per euro at 12:55 p.m. in Zurich, just shy of the two-year peak hit earlier on Tuesday.

SNB President Thomas Jordan has said there’s still room to maneuver both on interventions and interest rates should the economy deteriorate. He’s previously shown a willingness to take dramatic action when needed, and traders will need little to remind them of his market-shaking decision in 2015 to remove a franc cap.

Despite the increase in participants expecting an SNB cut, the median forecast in the survey is for the key rate to remain unchanged.

(Updates with franc in fifth paragraph. An earlier version of this story corrected Raiffeisen’s name in third paragraph.)

To contact the reporters on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net;Harumi Ichikura in London at hichikura@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss

©2019 Bloomberg L.P.

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SWI swissinfo.ch on Instagram

SWI swissinfo.ch on Instagram

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