2020.09.2407:47:00UTC+00Swiss Central Bank Holds Key Rate As Expected

Switzerland's central bank maintained its expansionary monetary policy stance on Thursday to cushion the impact of the coronavirus pandemic on economic activity and inflation.

The Swiss National Bank retained the policy rate and interest on sight deposits at the SNB at ?0.75 percent, as widely expected.

As the Swiss franc is still highly valued, the SNB said it is willing to intervene more strongly in the foreign exchange market, while taking the overall exchange rate situation into consideration.

The central bank observed that the outlook to inflation is subject to unusually high uncertainty.

Consumer prices are forecast to fall 0.6 percent this year. Inflation is expected to turn positive next year, to 0.1 percent and increase slightly further to 0.2 percent in 2022.

The economy experienced a sharp recession due to the coronavirus pandemic. GDP is set to shrink by around 5 percent this year.

The economic activity picked up since May following the relaxation of health policy measures. This should be reflected in a strong rise in the third quarter GDP. The positive development is likely to continue in 2021, the bank said.