A Swiss central bank (SNB) rate cut in June could become necessary if the Swiss franc (CHF) doesn't weaken from its current levels, said UBS.

Foreign exchange interventions by the SNB offer flexibility to counter temporary appreciation pressures on the Swiss franc, wrote the bank in a note to clients.

However, such interventions risk escalating trade tensions with the United States if perceived as currency manipulation, noted UBS.

By the bank's count, the SNB has lowered its policy rate outside regular meetings -- so-called "emergency rate cuts" -- on 10 occasions since 2001. A rapid appreciation of the Swiss franc, particularly against the euro, has frequently triggered such emergency rate cuts, but not always.

Given the current environment -- characterized by already low inflation, a deteriorating growth outlook, and rapid franc appreciation -- an emergency rate cut by the SNB would certainly not be unusual compared with past instances, stated UBS.

An emergency rate cut is the most aggressive option, likely to be considered if the SNB judges that the outlook for inflation and growth has significantly deteriorated, added the bank.