Swiss National Bank leaves expansionary monetary policy unchanged - Quarterly Bulletin

The Swiss National Bank (SNB) is maintaining its expansionary monetary policy. Interest on sight deposits at the SNB is to remain at - 0.75% and the target range for the three-month Libor is unchanged at between - 1.25% and - 0.25%. At the same time, the SNB will remain active in the foreign exchange market, as necessary. The negative interest rate and the SNB's willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing upward pressure on the currency. The Swiss franc is still significantly overvalued. The SNB's expansionary monetary policy is aimed at stabilising price developments and supporting economic activity.

The new conditional inflation forecast has been revised slightly downwards compared to the June forecast. Up to the first quarter of 2017, the path of inflation remains almost the same. Thereafter, the slightly less favourable global economic outlook dampens inflation in Switzerland. For 2016, the inflation forecast remains unchanged at - 0.4%. For 2017, the SNB expects inflation of 0.2%, compared to 0.3% forecast in the last quarter, while for 2018, the forecast has fallen from 0.9% to 0.6%. The conditional inflation forecast is based on the assumption that the three-month Libor remains at - 0.75% over the entire forecast horizon.