Key highlights of the week ended December 11

Source: Dukascopy Bank SA
Switzerland
The SNB 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.

UK
The BoE kept interest rates at record lows, pointing to lower oil prices and weak wage growth, which is likely to keep a lid on inflation for some time to come. The nine-member Monetary Policy Committee voted eight to one to leave the main interest rate at 0.5%, where it has been since 2009. Policy makers voted unanimously to maintain the size of the BoE's bond portfolio at 375 billion pounds. For the majority officials, the outlook for growth and inflation in Britain does not yet justify a hike in the BoE's benchmark rate.

New Zealand
The RBNZ lowered its official cash rate for the fourth time this year, saying the nation's economy needed support amid lower terms of trade, while inflationary pressures remained benign. In a widely expected move, RBNZ Governor Graeme Wheeler delivered a quarter percentage point rate cut to return OCR to its historic low level of 2.50%. A sharp appreciation of the New Zealand Dollar since the central bank last cut interest rates in September dashed every hope of getting inflation back to target levels. The Kiwi Dollar has gained around 5% on a trade weighted basis since August, and from $0.63 versus the Greenback to $0.67. 

Canada
BoC Governor Stephen Poloz said the economy does not need unconventional policies such as QE to boost growth, with a weaker local Dollar and recent rate cuts supporting the recovery. So far this year the central bank has lowered its benchmark interest rate two times, bringing it to 0.5%. However, Poloz admitted that Canada's economy could follow other countries, which have recently gone to negative interest rates. The Governor said "the effective lower bound for Canada's policy rate is around minus 0.5%, but it could be a little higher or lower". Poloz's comments suggested that the BoC still had more room to manoeuvre in response to negative shocks. 

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