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Looming ECB rate hikes give SNB plenty to ponder

We forecast the SNB to largely shadow ECB rate hikes over the next 18 months or so, albeit allowing the interest rate differential with the euro-zone to widen from 25bps at present to 50bps by end-2022. But the balance of risks is skewed towards the Bank letting the rate gap widen by more, embracing a weaker franc, and perhaps taking the opportunity to start to shrink its out-sized balance sheet.

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