SNB to defend cap until 2015

Is Alpine economy strong enough to withstand looming domestic and global risk in order to develop at a sustained pace without central bank's support? A poll conducted by Bloomberg showed that 64% of economists expect the Swiss National Bank to remove the cap after the first quarter of 2015. Some analysts, however, expected the cap to be lifted next year, and some see the same measure happening a year later. The Swiss Franc is considered as a safe haven among investors, hence in times of heightened market stress and concerns over Eurozone's economy, the Franc almost reached parity with the Euro in August 2011. Since then the SNB has amasses record foreign-exchange reserves through its market interventions in order to defend the cap of 1.20 per Euro seeking to prevent deflation and boost economic growth. However, there was no need for any intervention for more than a year, while SNB's President Thomas Jordan is constantly reiterating his pledge to defend the cap for as long as it is needed.

This year, however, the Franc fell 2.2% against the Euro, as the risk of a break up on the 17-nation bloc that shares Euro recedes. Though external risks begin to wane, Swiss inflation is still surprising markets to the downside. Consumer Price Index, which accounts a majority of overall inflation in the country, fell 0.1% on a seasonally adjusted base in October, confounding estimates for a 0.1% increase, and bolstering the case the cap is still needed.