Switzerland: SNB maintains minimum exchange rate and ultra-low interest rates
December 12, 2013
At its latest monetary policy meeting scheduled for 12 December, the Swiss National Bank (SNB) decided to keep the three-month Libor target at the historically-low range of 0% to 0.25% that was established in August 2011. This decision was on par with market expectations. The Central Bank also reaffirmed its commitment to maintain the 1.20 CHF per EUR cap, stating that the exchange rate cap "continues to be the right tool to avoid undesirable tightening of monetary conditions in the event of renewed upward pressure on the Swiss franc."
In its statement, the Central Bank pointed out that economic activity developed positively in the third quarter, but that recent economic data signals that growth is likely to cool in the fourth quarter. In addition, the Bank acknowledged that, given, "the vulnerable economic situation abroad," downside risks persist for the Swiss economy. Regarding price developments, monetary authorities recognized that consumer prices remain low and that inflation pressures remain contained due to lower prices in the Eurozone and in global commodities.
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% and 0.25%.
Author: Ricardo Aceves, Senior Economist