- Swiss National Bank
The Swiss National Bank maintained interest rates at record lows and said the recent depreciation of the Franc did not altered its decision to intervene in currency markets if needed. The SNB, led by President Thomas Jordan, kept its rate on sight deposits at minus 0.75%. The central bank also left the target range for the three-month Libor unchanged at between -1.25% and -0.25%. While Switzerland's economy returned to growth and the nation's currency weakened, the Franc remained 10% stronger versus the Euro than at the beginning of the year when the SNB abandoned its currency cap. At the same time, new headwinds are mounting, with risks including the Chinese economy's slowdown, the possibility of more stimulus by the European Central Bank and the Fed's first rate hike in almost a decade.
Supported by strong domestic demand, the SNB expects growth of around 1%, in line with its June forecast. It said consumer prices will fall 1.2%, more than the 1% previously estimated. Moreover, the central bank projects inflation falling 0.5% in 2016 and rising 0.4% in 2017. Economists expect that the SNB may lower its benchmark rate to minus 1.25%, particularly if the ECB decides to expand its QE programme.
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