- Swiss National Bank
The Swiss National Bank kept interest rates unchanged at a record low and reiterated its pledge to intervene in currency markets to weaken the Franc, which remains significantly overvalued. The SNB held a key deposit rate at –0.75% despite the expanded stimulus programme from the European Central Bank, which may eventually put upward pressure on the Swiss currency versus the Euro. The central bank also kept its target range for the three month London interbank offered rate at –1.25% to –0.25%. Negative interest rates are intended to weaken demand for the Swiss Franc by making it less attractive for investors from overseas, who turn to the currency for a haven in times of shaky global markets. Moreover, negative rates are also intended to support economic growth by encouraging banks to lend more to consumers and businesses.
The SNB also revised downwards its forecast for the Swiss economy to expand this year of between 1% and 1.5%, compared with its December's estimate of a 1.5% growth rate. In addition, the central bank said that while it predicts consumer prices to decline again this year by 0.8%, The Swiss economy should emerge from several years of deflation in 2017. The SNB anticipates consumer price inflation to climb 0.1% next year and 0.9% in 2018.
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