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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