The Swiss National Bank left its benchmark interest rate unchanged at record-low levels and reiterated that it is still prepared to take further action to weaken the franc, it announced on Thursday.
Advertisement
“We’ve always said we do not rule out another rate cut”, Thomas Jordan told journalists at a news conference following the SNB’s decision to stick to its current monetary policy.
Ahead of the announcement, the Swiss franc showed mixed trading against its major rivals. 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%.
The franc is viewed as a safe-haven currency in times of uncertainty and rising anxiety over the implications of a British exit from the European Union has pushed the franc higher in recent weeks.
The SNB has been active in the foreign exchange markets, printing francs to buy euros, and swelling its own foreign currency reserves as a result.
Still, the SNB said it is keeping a close watch on the June 23 referendum in the United Kingdom on its membership in the European Union, and is ready to take steps to offset any turbulence.
European stocks rose early on Wednesday, while China’s stock market saw the biggest gains in two weeks, shrugging off MSCI’s decision not to add mainland shares to one of its key benchmark indexes.
The central bank also released its annual Financial Stability Report on Thursday that measures the risks posed to the economy from the banking system. This is set to improve from the beginning of July when Credit Suisse and UBS will be expected to increase their leverage ratios to at least 5%.
Advertisement
The SNB upgraded its consumer price forecast for this year, and now expects a decline of 0.4% compared with an expectation of a 0.8% drop at its last meeting in March. According to the central bank, the jobless rate is expected to stabilize in the second half of 2016, and the Swiss economy is likely to grow between 1 percent and 1.5 percent for the whole of 2016. But now expects a return to a slight inflation of 0.3 percent in 2017, up from the 0.1 percent previously predicted.
