SNB Keeps Rates Low - 14.6.2012

The Swiss National Bank said in a statement on monetary policy today that it will keep the target range for the three-month Libor rate unchanged at 0%-0.25%. The central bank noted that Switzerland will probably avoid risks of inflation in the near future. According to the bank’s forecast, inflation rate will decrease to -0.5% in 2012 from 0.2% in 2011, but will rise gradually to 0.3% in 2013 and will reach 0.6% in 2014. At the same time the bank expects a “significant economic slowdown over the rest of the year”, although economic growth for the whole year may reach 1.5%, it said. As for the Swiss franc’s exchange rate, it still remains elevated, according to the statement. The SNB will maintain the minimum exchange rate of 1.20 francs per euro and is ready to protect the floor buying foreign currency in “unlimited quantities” and “take further measures at any time” if necessary. The franc has been weakening in May against the US counterpart, but has managed to regain some ground in June, staying today at 0.9538-0.9567. At the same time the single currency remains in a narrow range against the franc, close to the floor of 1.20, staying in June at 1.2003-1.2020.