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Swiss Central Bank Affirms Expansionary Policy Stance; Cuts Inflation Forecast

Switzerland's central bank kept its expansionary monetary policy stance as it expects the economy to contract the most in over five decades and inflation to remain more negative than forecast earlier, this year due to the impact of the coronavirus, or Covid-19, and the lockdown restrictions imposed to slow the pandemic.

The Swiss National Bank left the key interest rate unchanged at -0.75 percent, in line with economists' expectations, and said it remains willing to intervene more strongly in the foreign exchange market due to the high valuation for the Swiss franc.

"The SNB's expansionary monetary policy remains necessary to ensure appropriate monetary conditions in Switzerland," the central bank said in a statement.

The bank cut its inflation forecast for this year to -0.7 percent from -0.3 percent seen in March, citing weaker growth prospects and lower oil prices.

The central bank said the economy is set to shrink around 6 percent this year, which would be worst decline since the oil crisis of 1970s.

The SNB hopes that any second wave of the coronavirus pandemic will be successfully prevented globally.

The Swiss economy is in a sharp recession and the slump in economic output will be even more severe in the second quarter, the SNB said.

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