Swiss National Bank Quarterly Monetary Policy Review Leaves Settings Unchanged

December 11, 2014

The cap on Swiss franc appreciation at 1.2000 per euro, first imposed in September 2011, remains firmly intact, and so will the virtual zero interest rate policy.  The 3-month Swiss Libor target range remains at 0-0.25%, and the point estimate within those boundaries is zero.  Prolonging the duration of this emergency accommodative stance, SNB officials once more revised projected inflation lower.  According to the latest policy assessment, even when assuming that the franc, which has lately traded near to 1.20 per euro, depreciates and if the zero interest rate stance is kept over the next two years, CPI inflation is expected to average zero this year, -0.1% in 2015, and 0.3% in 2016.  On-year positive CPI inflation does not reemerge until early 2016 and is only projected at 0.5% at end 2016 and 0.8% in mid-2017.  The statement projects 2% economic growth in 2015 with continuing underutilization of productive capacity.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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