Switzerland: SNB leaves rates unchanged and maintains minimum exchange rate
December 13, 2012
At its 13 December monetary policy meeting the Central Bank decided to maintain the three-month Libor target rate at the historically-low range of 0% to 0.25% established in August 2011 in a decision expected by the market. The Swiss National Bank (SNB) also confirmed its commitment to maintain the CHF 1.20 per EUR cap established in September 2011, by buying foreign currency "in unlimited quantities" in order to enforce the minimum exchange rate.
In its statement, monetary authorities stressed that the Bank maintains its inflation forecast for 2012 as weak domestic demand in the Eurozone and a strong Swiss franc continue to exert downward pressures on consumer prices. Moreover, the Bank recognised that, although growth in the U.S economy as well as in emerging economies picked up, a recession persists in the Euro area. Meanwhile, the Bank expects the economy to lose steam in the final quarter of 2012 and stressed that downside risks persist.
Author: Ricardo Aceves, Senior Economist