14.12.2017

SNB confirmed its monetary policy to combat the "highly valued" Swiss franc

400The Swiss National Bank maintained its ultra-loose monetary policy stance on Thursday, saying it would keep its negative interest rates in place to combat the “highly valued” Swiss franc.

The SNB kept the target range for its benchmark three-month interest rate at minus 1.25 percent to minus 0.25 percent, in line with expectations of analysts polled by Reuters. 

The SNB also maintained a negative interest rate of 0.75 percent on deposits of commercial banks at the national bank, a measure to reduce the allure of the Swiss franc for investors and to further relieve pressure on the safe-haven currency which has lost 8 percent against the euro EURCHF= this year. SNB President Thomas Jordan is wary of any steps that might entice investors to pile back into the currency and fuel a rally.


The Swiss central bank also updated its economic forecasts on Thursday and now sees inflation at 0.7 percent in 2018 and 1.1 percent in 2019, versus its September prediction of 0.4 percent and 1.1 percent respectively. It expects price pressures to accelerate to 2.1 percent in the third quarter of 2020.

“The depreciation of the Swiss franc reflects the fact that safe havens are currently less sought after,” the SNB said. “However, this development is still fragile.”

The SNB has already responded to the franc’s decline, tweaking its language in September to say the move had helped curb its “significant overvaluation,” a sentiment reiterated on Thursday. The currency is currently about 1.16 per euro, down from 1.07 a year ago.

The SNB also issued a first take on growth next year, predicting an expansion of around 2 percent after 1 percent in 2017.






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