Switzerland’s central bank on Thursday kept its expansionary monetary policy unchanged by holding the key interest rate unchanged, citing a still strong franc, and trimmed the inflation forecast for this year due to weaker outlook for global economy.
The Swiss National Bank left its interest rate on sight deposits unchanged at -0.75 percent and the target range for the three-month Libor between -1.25 percent and -0.25 percent.
The decision was in line with economists’ expectations.
The previous move in the sight deposit rate was a 50 basis points reduction in January 2015, when the bank also abandoned its currency exchange rate ceiling of CHF 1.20 per euro.
The SNB said it will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. The bank trimmed the inflation forecast for this year to 0.3 percent from 0.5 percent and forecast 1.2 percent price growth for next year. This downgrade was mainly due to weaker outlooks for growth and inflation abroad, and the resulting reduction in expectations regarding policy rates in the major currency areas going forward.
The inflation outlook for next year was cut to 0.6 percent from 1 percent. The bank forecast 1.2 percent inflation in 2021.
The bank still expects GDP growth of around 1.5 percent this year after a 2.5 percent expansion last year.