"The inflation path is being shifted down, but overall the picture stays the same"
- Alexander Koch, an economist at UniCredit
The Swiss National Bank pledged its readiness to keep up its defence of the franc cap, after almost doubling its currency reserves. The SNB will continue to intervene in currency markets in order to prevent the appreciation of the Swiss Franc against the Euro, as many investors consider Franc as a safe haven currency. The decision to put a cap was taken in September of 2011, after the Franc neared parity with the single currency. Another reason to put a cap was to shield the country from recession and so far the economy has avoided the downturn. A report by the SNB also showed that the Swiss economy is expected to expand by 1.2% in 2013, and then accelerate to 1.6% in 2014. Consumer prices will grow by 0.2% this year and 0.9% next year. At the same time, the bank kept its benchmark interest rate at 0% to 0.25%, meeting analysts' expectations.
"The inflation path is being shifted down, but overall the picture stays the same," said Alexander Koch, an economist at UniCredit. "Since the cap was set in 2011, their stance has been relatively unchanged. They've made clear that the ceiling is not for fine-tuning, and I expect the SNB's stance to continue."
"Downside risks to the Swiss economy remain considerable," Jordan said in Aarau.
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