Swiss Quarterly Monetary Policy Review

September 20, 2018

A quarterly review of Swiss monetary policy kept the targeted interest rate at -0.75% within a range of negative 0.25% to negative 1.25% on 3-month Swiss Libor. A statement from the Swiss National Bank protests against a noticeable and unwelcome appreciation of the franc since the previous policy review in June. Subjective foreign exchange market intervention is deemed to be still appropriate almost four years after the central bank ended automatic intervention whenever market pressure threatened to strengthen the franc beyond the 1.20 per euro level. Because of faster-than-expected Swiss growth in the first half of 2018, the central bank’s 2018 growth forecast was revised higher to 2.5-3.0%. But franc appreciation necessitated a downward revision to the path of future inflation from the second quarter of 2019 onward. By 3Q20, CPI inflation is a half percentage point lower than assumed previously, and it is unlikely to reach 2.0% until the spring of 2021.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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