"The SNB currently faces no pressure to exit its very expansionary monetary policy. For 2014, we expect the SNB to keep the exchange rate floor unchanged."
- Maxime Botteron, an economist at Credit Suisse
In December 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. In a shorter term, however, they do not expect any changes in the SNB policy and the fact Swiss central bank refrained from any changed in the policy on Thursday, during the December meeting, is reinforcing the case the cap is still needed. Thomas Jordan promised unlimited purchases of foreign currency in order to defend the ceiling introduced in September 2011, as Eurozone economy is still struggling to keep momentum. It was not a surprise that Swiss policymakers decided to maintain its cap on the Franc at 1.20 per Euro and keep borrowing costs at 0.25%.
Despite the fact the SNB has not made any market interventions for more than a year, risks for the economy are still high. The Eurozone emerged from its longest-ever recession in the second quarter, however, the ECB predicts the economy to contract 0.4% this year, and during November's meeting Draghi cut the benchmark interest rate by 0.25%, refreshing a record-low. The SNB currently projects a growth between 1.5% and 2% this year, while in 2014 the Alpine economy is projected to accelerate up to 2%.
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