Switzerland: Central Bank maintains minimum exchange rate and ultra-low interest rates
September 19, 2013
At its 19 September monetary policy meeting, the Swiss National Bank (SNB) decided to maintain the three-month Libor target at the historically-low range of 0% to 0.25% established in August 2011. This decision was widely expected by the market. The Central Bank also reiterated its intention to keep the 1.20 CHF per EUR cap, arguing that, although volatility in global financial markets has moderated in recent weeks, the Swiss franc remains high.
According to the statement from the SNB, GDP growth increased more than expected in the second quarter, resulting in part from robust growth in services. The Bank added that exports should pick up in the second half of 2013 driven by firmer global demand. Regarding price developments, monetary authorities recognized that consumer prices will increase somewhat in the coming months, mainly due to the recent spike in oil prices.
FocusEconomics Consensus Forecast panelists expect that the Swiss National Bank will stay put in both 2013 and 2014, with interest rates remaining unchanged at the current range of between 0% to 0.25%.
Author: Ricardo Aceves, Senior Economist