Swiss National Bank

December 10, 2015

Swiss monetary policy remains unchanged after the final quarterly review of 2015.  The year began with an unscheduled mid-January abandonment of a 1.20 franc per euro ceiling rate and rate reductions to a 3-month Libor range of minus 1.25% to minus 0.25% and a sight deposit rate of –0.75%.  SNB President released a statement today that justifies continuing subjectively employed forex intervention as deemed necessary and asserts,

The negative interest rate and the SNB’s willingness to intervene in the foreign exchange market are intended to ease pressure on the Swiss franc. The SNB’s monetary policy thus helps to stabilize price developments and support economic activity.

The statement revises projected inflation in 4Q15 and 1Q16 a tad higher, leaves forecasts for the ensuing four quarters the same as made in September, and bumps down projected inflation marginally in the forecast horizon from 2Q17 through 2Q18.  Calendar year forecasts of average CPI change are now –1.1% this year, –0.5% for 2016 and a mere +0.3% in 2017.  As late as the summer of 2018, officials believe inflation will be no higher than 1.2% with no further monetary policy modifications.  In this subdued baseline view of the Swiss economy, real GDP is expected to rise a bit less than 1.0% this year and just 1.5% in 2016.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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