ZURICH (Reuters) – The Swiss National Bank is keeping its ultra-loose monetary policy in place, the central bank said on Thursday, despite rising inflation and the Swiss franc hitting its highest valuation in six-and-a-half years.
The SNB kept its policy rate locked at -0.75%, as unanimously forecast by economists in a Reuters poll, as well as a commitment to conduct currency interventions to stem the rise of the safe-haven currency.
The central bank also kept its description of the franc as “highly valued,” the same wording it has used since September 2017. Since then the franc has appreciated 10% versus the euro to reach its highest level since July 2015.
“The SNB is maintaining its expansionary monetary policy,” the SNB said in a statement. “It is thus ensuring price stability and supporting the Swiss economy in its recovery from the impact of the coronavirus pandemic.”
The SNB appears to have restarted its foreign currency interventions after standing on the sidelines for weeks, according to an analysis of sight deposits which are a proxy for its foreign currency purchases.
The SNB amended its economic forecasts, saying it now expects Swiss GDP to grow by around 3.5% in 2021, up from its previous view in September of around 3%. In its first outlook for 2022, it forecast growth of around 3%.
Inflation is expected to be 0.6% in 2021, up from 0.5% in the SNB’s September forecast. For 2022 Swiss inflation is expected to be 1%, and reach 0.6% in 2023, compared to previous forecasts for 0.7% and 0.6% rates respectively.
(Reporting by John Revill; Editing by Michael Shields)
