SWISS NATIONAL BANK MAINTAINS ULTRA-LOOSE POLICY, CITING THE FRAGILE EXCHANGE RATE SITUATION

2018-07-02 12:48:41

The Swiss National Bank maintained its ultra-loose monetary policy, lowering its medium-term forecast for Swiss inflation, indicating a less pressing need to hike rates, citing the "fragile" exchange rate situation.

The Swiss National Bank sees no reason to start normalizing its ultra-loose monetary policy, citing rising political uncertainties which could trigger renewed demand for the safe-haven Swiss franc.

The SNB kept its description of the franc as "highly valued," as it held its target range for the three-month London Interbank Offered Rate (LIBOR) at -1.25 to -0.25%.

The Central Bank also held the negative interest rate it charges on sight deposits at -0.75%, adding it remained ready to intervene in the foreign currency markets to block a rise in the Swiss franc.

After weakening to breach the symbolic 1.20 level versus the euro in mid-April, the franc has resumed its upward trajectory. The near 5% appreciation has been largely driven by investors seeking the safe-haven currency.

Both measures have been employed by the SNB to stem investor appetite for the franc over the last three-and-a-half years.

The SNB maintained its description of the franc as "highly valued," and adding despite the currency's weakening during 2018 the situation on the currency markets was "fragile."