Ramla SoniThe Swiss National Bank (SNB) has decided to maintain its negative interest rate policy at -0.75 per cent as it highlights a “fragile” environment for the franc.
It also maintained the rate it charges on commercial banks’ sight deposits at -0.75 per cent.
The central bank pledged to remain active in the currency markets despite recent speculation that it might lower its rates to ease upward pressure on the franc. The franc has gained 3 per cent in value against the euro, with the SNB describing the franc as “highly valued”.
The SNB downgraded inflation expectations for 2020 and 2021. The 2019 conditional inflation forecast stands at 0.4 per cent, with a 0.1 per cent forecast for 2020 and a 0.5 per cent forecast for 2021, the bank said.
In October, SNB chairman Thomas Jordan warned that with global growth expected to be weak, the prospect of a rate rise in Switzerland was unlikely to materialise in the coming months.
The SNB said the situation on the foreign exchange market is “still fragile”.
“Negative interest and the willingness to intervene counteract the attractiveness of Swiss franc investments and thus ease the upward pressure on the currency,” the bank said.
Last month the Fed described its three interest rate cuts since July as an insurance policy, protection for US growth against trade tensions, low inflation and a global downturn, suggesting that once tensions eased, it would raise rates again.
However, with those cuts now in place, the US central bank said that the current policy rate of 1.5-1.75 per cent is no longer temporary.
