SNB kept sight deposit rate unchanged at -0.75% as widely expected. Three month Libor target range is held at -1.25% to -0.25% correspondingly. SNB also pledged to “remain active in the foreign exchange market as necessary”.
SNB also noted that Swiss Fran is “still highly valued, and the situation on the foreign exchange market continues to be fragile.” Negative interest rate and the willingness to intervene “remains essential”. Theses measures “keep the attractiveness of Swiss franc investments low and reduce upward pressure on the currency.
Near term inflation forecast was revised lower due to “drop in oil prices”. Medium term inflation forecast is also revised lower due to “more moderate growth prospects”.
- For 2018, inflation is forecast to be at 0.9%, unchanged
- For 2019, inflation is forecast to be at 0.5%, revised down from 0.8%
- For 2020, inflation is forecast to be at 1.0%, revised down from 1.2%
Slow down in Q3 is seen as temporary by SNB. And it anticipates “solid growth in the coming quarters”. For the near term, world economy will continue to expand “somewhat above potential”. But “gradual slowdown is likely in the medium term”. SNB pointed out some significant risks including “political uncertainties and protectionist tendencies” For 2018, growth is projected to be at 2.5%, slightly revised down. For 2019, growth is projected to slow to 1.5%
