Swiss Central Bank Leaves Key Rates Unchanged

        By Neil MacLucas and John Revill
        ZURICH--Switzerland's central bank maintained a key deposit rate at -0.75% and reiterated it was prepared to take further measures to blunt the strength of the Swiss franc, which it said remains "significantly" over-valued.
        The Zurich-based Swiss National Bank said Thursday it was maintaining the negative rate on sight deposits. The rate is in effect a 0.75% charge it applies to deposits from commercial banks.
        The central bank also held its target range for the three-month London Interbank Offered Rate, or Libor, at -1.25% to -0.25%.
        The negative interest rates are part of the SNB's strategy for combating the strength of the franc, which is seen as a safe haven in times of economic uncertainty, by blunting the currency's appeal to foreign investors. The bank also indicated it would intervene in the currency market if conditions warranted such action.
        "Negative interest rates in Switzerland make holding investments in Swiss francs less attractive and will help to weaken the Swiss franc over time," the bank said in a policy statement.
        Thursday's decision, which was widely anticipated by markets, marks the SNB's second policy statement since it ended a 3 1/2-year policy of capping the currency at 1.20 francs to the euro in January. The policy had been part of efforts to protect the country's exporters, many of which are now cutting pay and moving work abroad as they grapple with the strong currency.
        The SNB acknowledged the franc remained a burden and said it will take exchange rates into account when it makes future decision. The bank will be "active in the foreign exchange market, as necessary, in order to influence monetary conditions," the SNB said.
        The central bank also raised its 2015 outlook for average Swiss inflation to -1% from -1.1%. It also expects average inflation of -0.4% in 2016, above the -0.5% it forecast in March. The SNB said it expects inflation to turn positive in 2017.
        The SNB forecast gross domestic product growth of just under 1% for 2015, unchanged from its forecast in March.
        Write to Neil MacLucas at neil.maclucas@wsj.com and John Revill at john.revill@wsj.com
        (END) Dow Jones Newswires

        June 18, 2015 04:29 ET (08:29 GMT)

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