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Swiss Central Bank Maintains Negative Interest Rates

The Swiss National Bank maintained its expansionary monetary policy and upgraded its inflation projections.

The interest rate on sight deposits at the SNB was retained at -0.75 percent and the target range for the three-month Libor was kept unchanged between -1.25 percent and -0.25 percent.

The bank said the Swiss franc has weakened against the euro and appreciated against the dollar since the last monetary policy meeting.

"Overall, this development is helping to reduce, to some extent, the significant overvaluation of the currency," the bank said. Nonetheless, the Swiss franc remains highly valued and the situation on the foreign exchange market is still fragile.

The negative interest rate and the SNB's willingness to intervene in the foreign exchange market as necessary therefore remain essential in order to reduce the attractiveness of Swiss franc investments and thus ease pressure on the currency.

The bank raised its inflation projection for 2017 to 0.4 percent from 0.3 percent. The outlook for 2018 was also revised up to 0.4 percent from 0.3 percent. For 2019, inflation is seen at 1.1 percent, instead of 1 percent.

Owing to weak GDP momentum in late 2016/early 2017, the current year is likely to see growth of just under 1.0 percent, SNB said.

by RTT Staff Writer

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