2017.12.1404:08:00UTC+00Swiss Central Bank Keeps Rates Unchanged

The Swiss National Bank maintained its expansionary monetary policy stance on Thursday, saying it will remain active in the foreign exchange market as necessary although the currency weakened against the euro and the US dollar.

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.

The overvaluation of the Swiss franc has continued to decrease, yet the franc remains highly valued, the bank noted. The depreciation of the Swiss franc reflects the fact that safe havens are currently less sought after.

However, according to SNB, this development is still fragile. Therefore, despite the easing of the situation, the bank said the negative interest rate and the willingness to intervene in the forex market as necessary remain essential.

These measures keep the attractiveness of Swiss franc investments low and thus ease pressure on the currency. A renewed appreciation would still be a threat to price and economic developments, the SNB said.

The bank expects 0.5 percent inflation instead of 0.4 percent. For 2018, inflation forecast was revised up to 0.7 percent from 0.4 percent, while the projection for 2019 was maintained at 1.1 percent.

The recovery in the Swiss economy looks set to continue in the coming months, the bank noted. For 2018, the SNB forecast GDP growth of around 2 percent, compared to 1 percent in 2017.