Swiss National Bank Keeps Policy the Same but Lowers Projected CPI Inflation Path

March 21, 2019

At the latest quarterly review of Swiss monetary policy, SNB officials kept policy unchanged. Since January 2015, when the automatic cap on Swiss franc was lifted and the interest rate target was cut by 50 basis points, the 3-month Libor rate target band has been an all-negative range of minus 1.25% to minus 0.25%, the sight deposit rate target has been at -0.75%, and officials have reserved the right to intervened subjectively when deemed necessary for preventing undue franc appreciation from an already overvalued level. A released statement today cuts projected annual inflation to 0.3% this year versus a prior forecast of 0.5%. Officials expect inflation to be at 0.6% next year, down from December’s forecast of 1.0%, and foresee only 1.2% inflation in 2021. In this lower path, inflation doesn’t cross above 1.0% until the spring of 2021 and is only reaches 1.5% by the end of that year, even if there is not rate increase in between now and then.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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