SNB Keeps Negative Rate On Hold; Says Franc 'Highly Valued'
14 Settembre 2017 - 08:52AM
RTTF2
The Swiss National Bank maintained its expansionary monetary
policy stance and tweaked its view on the currency while raising
the inflation forecast.
The interest rate on sight deposits at the SNB was retained at
-0.75 percent and the target range for the three-month Libor was
kept unchanged between -1.25 percent and -0.25 percent, the bank
said in a statement on Thursday.
The SNB said it will remain active in the foreign exchange
market as necessary, while taking the overall currency situation
into consideration.
The bank observed the Swiss franc has weakened against the euro
and appreciated against the dollar since the last monetary policy
meeting.
"Overall, this development is helping to reduce, to some extent,
the significant overvaluation of the currency," the SNB said.
Nonetheless, the Swiss franc remains "highly valued" and the
situation on the foreign exchange market is still fragile, the bank
added. Previously, the bank saw the Swiss franc as "significantly
overvalued".
The negative interest rate and the SNB's willingness to
intervene in the foreign exchange market, as necessary, remain
essential in order to reduce the attractiveness of Swiss franc
investments and thus ease pressure on the Swiss franc, the bank
said.
Jessica Hinds, an economist at Capital Economics, does not
expect the SNB to raise rates before the end of 2019.
The SNB's continued accommodative policy stance, while the
European Central Bank gradually reduces its policy support,
suggests that the franc will depreciate further over the next
couple of years, the economist said.
The SNB raised its inflation projections slightly for both this
year and next to 0.4 percent from 0.3 percent each. For 2019,
inflation was estimated to be 1.1 percent instead of 1 percent.
The economic indicators signaled moderate recovery in the Swiss
economy that has benefited from the consolidation of global
economic activity and renewed momentum in goods exports.
Citing the weak GDP momentum in late 2016/early 2017, the SNB
lowered the current year growth outlook to just under 1.0 percent
from roughly 1.5 percent.
Regarding the mortgage lending and property market, the SNB said
imbalances on the mortgage and real estate markets persist. The
bank said it will continue to monitor developments on these markets
closely and reassess the need for an adjustment of the
countercyclical capital buffer.
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