- Maxime Botteron, an analyst at Credit Suisse
The Swiss National Bank maintained interest rates at record lows and keep its pledge to intervene if needed to push back against on a strong Franc. The central bank kept its target range for three-month Libor at between -1.25% and -0.25% in line with expectations, but it said it would remain active in the currency market if necessary. The interest rate on sight deposits with the SNB remained unchanged at –0.75%. Announcing its decision, the central bank said its measures continue to help weaken the Swiss Franc. The SNB highlighted the importance of continue keeping the nation's currency shielded from excessive appreciation, as it harms the Swiss economy. Since dropping its 1.20-per Euro cap in January, the SNB has adopted a twin strategy of negative rates and interventions to keep the Franc in check. The currency is still about 10% higher this year, growth stalled in the third quarter, and manufacturers and retailers have reported falling demand.
The central bank predicts an economic growth of just below 1% in 2015, with GDP rising 1.5% next year. In its analysis, the SNB said the global backdrop deteriorated, but it remained "cautiously optimistic". Inflation in the Alpine country is expected to decline 0.5% next year, before climbing 2017.
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