The interest rate on sight deposits with the SNB remains at –0.75% and the exemption thresholds remain unchanged, says Swiss National Bank
The Swiss National Bank (SNB) is leaving the target range for the three-month Libor unchanged at between –1.25% and−0.25%. The interest rate on sight deposits with the SNB remains at –0.75% and the exemption thresholds remain unchanged. Negative interest helps to make it less attractive to hold investments in Swiss francs. Overall, the Swiss franc is significantly overvalued and should continue to weaken over time.
The SNB will continue to take account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy. It will therefore remain active in the foreign exchange market, as necessary, in order to influence monetary conditions.
The SNB’s conditional inflation forecast has been adjusted substantially downwards compared to the December forecast. Together with the sharp fall in oil prices, the appreciation of the Swiss franc since the minimum exchange rate was discontinued moves inflation further into negative territory for a short period.
For 2015, the SNB has revised its inflation forecast downwards by 1% percentage point to −1.1%. Inflation reaches its low point in the third quarter of 2015, at –1.2%. Thereafter, forecast inflation rises more rapidly than in the December forecast, due to the interest rate reductions since the last monetary policy assessment. Nevertheless, in 2016, inflation will amount to –0.5%, which is 0.8 percentage points lower than in the December forecast. Not until 2017 will inflation move into positive territory again, at 0.4%. The conditional forecast assumes that the three-month Libor remains at –0.75% over the entire forecast horizon, and that the Swiss franc weakens.
The global economic recovery is continuing. In the fourth quarter of 2014, growth in the US remained above potential. The favourable momentum of the economy there is also reflected in the sound growth in employment. The economy picked up somewhat in the euro area. This was primarily due to strong quarterly growth in Germany. In Japan, too, demand increased.
Consumer price inflation edged down worldwide due to lower oil prices. In many advanced economies, inflation moved into negative territory at the beginning of 2015
The SNB will continue to take account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy. It will therefore remain active in the foreign exchange market, as necessary, in order to influence monetary conditions.
The SNB’s conditional inflation forecast has been adjusted substantially downwards compared to the December forecast. Together with the sharp fall in oil prices, the appreciation of the Swiss franc since the minimum exchange rate was discontinued moves inflation further into negative territory for a short period.
For 2015, the SNB has revised its inflation forecast downwards by 1% percentage point to −1.1%. Inflation reaches its low point in the third quarter of 2015, at –1.2%. Thereafter, forecast inflation rises more rapidly than in the December forecast, due to the interest rate reductions since the last monetary policy assessment. Nevertheless, in 2016, inflation will amount to –0.5%, which is 0.8 percentage points lower than in the December forecast. Not until 2017 will inflation move into positive territory again, at 0.4%. The conditional forecast assumes that the three-month Libor remains at –0.75% over the entire forecast horizon, and that the Swiss franc weakens.
The global economic recovery is continuing. In the fourth quarter of 2014, growth in the US remained above potential. The favourable momentum of the economy there is also reflected in the sound growth in employment. The economy picked up somewhat in the euro area. This was primarily due to strong quarterly growth in Germany. In Japan, too, demand increased.
Consumer price inflation edged down worldwide due to lower oil prices. In many advanced economies, inflation moved into negative territory at the beginning of 2015
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