The Swiss National Bank on Thursday said it will retain the currency ceiling at CHF 1.2 per euro as risks to the economy from external developments remains high.
The target range for the three-month Libor was also left unchanged at 0.0-0.25 percent. The decision was in line with economists' forecast.
"Tensions can reappear at any moment on global financial markets," the central bank said in a statement. The minimum exchange rate is important "in order to avoid an undesirable tightening of monetary conditions for Switzerland in the event of sudden upward pressure on the Swiss franc," the bank added.
The SNB maintained its view that the Swiss franc remained high. "An appreciation of the Swiss franc would compromise price stability and would have serious consequences for the Swiss economy," it said.
The bank reaffirmed its commitment " to enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities." The SNB said it stands ready to take further measures, as required.
In his introductory remarks at a news conference after the monetary policy decision, SNB Chairman Thomas Jordan said the value of the Swiss franc remains high but should fall further over the next few quarters.
Citing a reduction in the oil price, the SNB lowered its forecast for consumer prices this year. The bank now expects prices to fall 0.3 percent in 2013 compared with a 0.2 decline forecast in March. The inflation outlook for both 2014 and 2015 was left unchanged at 0.2 and 0.7 percent, respectively.
Meanwhile, the growth forecast for this year was retained at 1.0-1.5 percent, but the bank expects a perceptible weakening in growth for the second quarter of 2013 after a significant rise in the gross domestic product in the first quarter.
Jordan said growth in employment has slowed, and unemployment has risen again somewhat, in seasonally-adjusted terms. Unemployment figures will increase again marginally to the end of the year, he added.
According to Jordan, the biggest risk to the economy was a renewed deterioration in the euro area financial and sovereign debt crisis. However, SNB still anticipates a gradual solution of the euro area crisis. He said the global growth may firm up gradually in the quarters ahead.
The global economy was weaker than expected in the first three months of the year, due to continued recession in euro area, hesitant recovery in the U.S. and losing growth momentum in China, SNB noted.
The risks for the Swiss economy continued to originate from the international environment, the SNB said. Domestically, the risks are mainly associated with the imbalances on the mortgage and real estate markets, which according to the bank, will grow further, given the sustained period of exceptionally low interest rates.
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