The Swiss National Bank left its interest on sight deposits at 0.75% below zero on Thursday and introduced the policy rate instead of the target range for the three-month Libor, placing it also at 0.75% under the neutral level.
Policymakers stuck to their assessment that the foreign exchange market “continues to be fragile” and that “the Swiss franc is still highly valued.”
The formulation has been used since September 2017 after the currency weakened to more than 1.1 per euro, until when it was seen as “significantly overvalued.” The dollar and the joint currency both dropped more than 1% in the past three months versus the Swiss franc. Rate-setters doubled the inflation outlook for this year to 0.6%, raised the forecast by 0.1 percentage points to 0.7% for 2020 and lowered it to 1.1% from 1.2% for the year after that. Risks for growth are tilted to the downside, they said and pointed to the imbalances in mortgages and real estate.
The dollar slipped 0.2% at 8:44 am GMT to 0.99336 Swiss francs and the euro was 0.13% down at 1.12246. The Swiss franc was up 0.05% at ¥109.04 and the pound dropped 0.26% against the Swiss counterpart to 1.25972