Europe ‘political cCircus’ has SNB bracing for stronger franc

Political events in Europe have the potential to complicate life for the central bank, which since the financial crisis has spent hundreds of billions of francs on interventions. Britain’s triggering of Article 50 to leave the European Union or a win by euro-skeptic Marine Le Pen in France’s presidential election could send investors into the haven franc.

Already, a rise in apprehension about the state of affairs in Europe appears to have prompted a pickup in SNB market activity to prevent the franc from gaining more ground against the euro. While a rate cut would increase the difference between Swiss and euro-area interest rates, in turn making the franc less attractive, a better global backdrop could mean Jordan and his colleagues have leeway to keep policy unchanged.