‘As long as the process of political stabilisation continues in Europe, the need for foreign exchange interventions should diminish.’ — Maxime Botteron, Credit Suisse
As markets expected, the Swiss National Bank left its loose monetary policy and interest rates unchanged at its meeting on Thursday amid the high degree of uncertainty in Europe. Policymakers voted to leave the Libor rate at -0.75% and the three-month Libor target range at -1.25% to -0.25%. The Bank remained highly in favour of negative interest rates and was committed to forex interventions amid the significantly overvalued Swiss Franc. Nevertheless, the SNB noted that the global economy and labour markets were recovering as expected, while inflation growth remained moderate in the majority of developed economies. According to the Bank’s forecasts, the domestic economy is expected to expand 1.5% this year, whereas inflation is set to rise 0.3%. In 2018 and 2019 the inflation rate is expected to climb 0.3% and 1.0%, respectively. The Bank expressed optimism over the economic outlook for the global economy. Also, monetary conditions in the United States are expected to ‘gradually normalise’ in the upcoming months. Thursday’s data also showed that the Central bank bought $48.4B in Swiss francs this year.
