PARIS (MNI) – The Swiss National Bank said Thursday it will
continue to keep short-term interest rates as low as possible and defend
the peg of the Swiss franc to the euro in order to counter the
currency’s appreciation resulting from inflowing capital in search of a
safe haven amid the Eurozone debt crisis.
The central bank reiterated that it will aim for a three-month
Libor at zero and “will maintain total sight deposits at the SNB at
significantly above CHF200 billion” in order to discourage capital
inflows.
“The Swiss National Bank will enforce the minimum exchange rate of
CHF1.20 per euro set on 6 September with the utmost determination,” it
said. “It is prepared to buy foreign currency in unlimited quantities.”
While SNB has been able to defend the peg to the euro, the Swiss
franc remains elevated and is likely to penalize exporters and dampen
economic activity.
The central bank trimmed its projection for domestic GDP growth
this year from around 2% to 1.5-2.0%.
Weaker growth is likely to weigh on price trends in the near term,
the central bank reasoned, revising down its inflation forecast for this
year from 0.9% to 0.4%. Forecasts for 2012 and 2013 were also lowered to
-0.3% and 0.5% from 1.0% and 1.7%, respectively.
–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com
[TOPICS: M$X$$$,M$$EC$,MT$$$$,M$$FX$,MGX$$$,MFX$$$]
