Switzerland’s central bank has kept interest rates at an all-time low, and has maintained the description of the Franc as “highly valued” after its latest move higher against the Euro.
 
As widely predicted, the deposit and policy rate remained at -0.75% on Thursday. Swiss National Bank (SNB) President Thomas Jordan and other policy makers echoed their promise to supplement sub-zero rates with currency interventions, as required, Bloomberg reports.
 
The Swiss Franc has gradually appreciated against the Euro since the middle of September, surpassing a key level of 1.04 in December. The advance led to suggestions the central bank could abandon the definition of the currency as “highly valued.” Yet Jordan stated that the real trade-weighted exchange rate has “hardly changed since the beginning of the pandemic,” so there was no requirement to change the label.
 
The SNB President also said the Swiss Franc has helped the country avoid the surge in inflation witnessed in the Euro area and the U.S.: “We have been able to prevent a stronger rise in inflation in Switzerland by allowing a certain amount of nominal appreciation,” he stated. That has “countered rising prices in that it makes imports cheaper.”
 
As part of its latest assessment, the central bank views consumer-price growth at 1% in 2022 and 0.6% in 2023. There was little change to the Franc following the decision, standing at 1.04382 per Euro in early Thursday trading.
 
The Swiss National Bank predicts the economy will grow around 3% in 2022, at a time when the government is attempting to curb another wave of Covid cases and mooting fresh restrictions.

 

“The recent worsening of the pandemic situation has again increased the uncertainty with regard to the forecasts, both for Switzerland and abroad,” the SNB stated. “Economic developments over the coming quarters will hinge on which additional containment measures are taken in the countries affected.”