Switzerland Monetary Policy September 2017


Switzerland: Central Bank keeps rates on hold

September 14, 2017

On 14 September, the Swiss National Bank (SNB) decided to hold the target range for the three-month Libor steady at between minus 1.25% and minus 0.25%, in line with market expectations. The Bank also held the interest rate on sight deposits steady at minus 0.75%. The rates have been on hold since January 2015.

Despite a weakening in the Swiss franc against the euro in recent months as resilient growth dynamics in the European Union have curtailed safe-haven inflows into the currency, the Bank noted the franc remains “highly valued”. While a departure from a “significantly overvalued” franc, this nevertheless motivated the decision to maintain an expansionary monetary policy stance and continue interventions in the foreign exchange market to ease demand for the currency. A depreciation in the franc caused inflation to pick up in the last two months, which prompted the Bank to revise up its conditional inflation forecast marginally to 0.4% for both 2017 and 2018, up from 0.3% in the previous quarter.

The economy has been grappling with dwindling growth as annual GDP growth in Q2 plummeted to the lowest level since Q4 2009. In view of the weak GDP figures, the Bank revised down its forecast for this year, projecting the economy will expand just under 1.0% in 2017, a significant drop from its previous estimate of 1.5%. Going forward, the Bank is expected to maintain its expansionary monetary policy to support a recovery in growth momentum. Clouding the outlook are uncertainties over the timing of the reversal in monetary stimulus by the European Central Bank, along with the trajectory of the Federal Reserve’s tightening cycle.

FocusEconomics Consensus Forecast panelists expect the midpoint of the three-month Libor target range to be at minus 0.73% at the end of 2017 and at minus 0.60% at the end of 2018.

Author:, Economist

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Switzerland Monetary Policy Chart

Switzerland Policy Rate August 2017

Note: 3-month Swiss Franc LIBOR target in %.
Source: Swiss National Bank (SNB).

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