Swiss central bank holds rates, pledges to ‘remain active’ on currency

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No change on interest rates or currency policy from the Swiss National Bank, but it has delivered a rare rise to its inflation forecast for this year.

At its once-a-quarter decision, the central bank said it would keep its deposit rate at -0.75 per cent, and keep the target range for three-month Libor unchanged at between -1.25 per cent and -0.25 per cent. Bristling at its perennial bugbear – the strong franc – it said it will “remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration.”

On inflation, it said:

Compared to December, the new conditional inflation forecast is slightly higher for the next few quarters. Increased oil prices in particular contribute to the rise in inflation in the short term.

The inflation forecast for 2017 has risen to 0.3%, compared to 0.1% in the previous quarter. For 2018, the SNB anticipates inflation of 0.4%, compared to 0.5% in the previous quarter.

The central bank sounded upbeat on the prospects for the global economy, also noting that the UK was “once again surprisingly strong”. For Switzerland itself, it said it is “cautiously optimistic”.

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