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Swiss central bank raises its inflation forecast and cuts growth forecasts for next year

2017-09-14 01:17 pm | Resource: NEWS | No Views : 232

The Swiss National Bank (SNB) has maintained its expansionist stance on monetary policy and has raised its view on the currency as inflation expectations rise.

The bank's interest rate on deposits will remain at -0.75 percent, the bank said in a statement on Thursday. The three-month Libor target range remained unchanged at 1.25 percent and -0.25 percent.

The Swiss National Bank said it could intervene in the foreign exchange market when necessary, taking into account the overall currency situation.

The Swiss franc has fallen against the euro and has fallen against the dollar since the last monetary policy meeting. The SNB said that this development generally helps to significantly devalue the currency.

The Swiss franc is still "highly valued" and the situation in the foreign exchange market remains fragile, the bank said. In the past, the bank saw the Swiss franc's exchange rate to be very high.

The bank said that the negative interest rate in addition to the bank's willingness to intervene in the foreign exchange market remains necessary to reduce the appetite for buying the Swiss franc, thus easing pressure on the franc and rising prices.

The SNB said the ECB was gradually cutting its asset purchase program, noting that the franc would fall further in the next two years.

The Swiss bank has raised its inflation forecast slightly this year, and for 2019 inflation is estimated at 1.1 percent instead of 1 percent.

The economic indicators showed a moderate recovery in the growth of the Swiss economy, which benefited from the recovery of global economic activity in addition to the increase in commodity exports.

Based on weak GDP in late 2016 and early 2017, the Swiss National Bank cut its growth forecast this year to just under 1.0 percent from about 1.5 percent.

With regard to mortgage loans and the real estate market, the Swiss National Bank said the imbalances in the mortgage markets were still in place, adding that the bank would continue to monitor developments in these markets closely.

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