The Swiss National Bank is keeping its monetary policy in place, despite rising inflation and the Swiss franc hitting its highest valuation in six-and-a-half years, according to the central bank on Thursday.
The policy rate of the SNB was kept at 0.75%, as was unanimously predicted by economists in a Reuters poll, as well as a commitment to conduct currency interventions to stem the rise of the safe-haven currency.
The central bank has also kept its description of the franc as highly valued, the same wording it has used since September 2017. Since July 2015, the franc has appreciated 10% compared to the euro to reach its highest level since July 2015.
The SNB said in a statement that the SNB is keeping its expansionary monetary policy in place. It is ensuring price stability and supporting the Swiss economy in its recovery from the coronaviruses epidemic. The SNB seems to have restarted its foreign currency interventions after sitting on the sideline for weeks, according to an analysis of sight deposits, which are a proxy for its foreign currency purchases.
The SNB said it now expects Swiss GDP to grow by around 3.5% in 2021, up from its previous view in September of around 3%. In its first outlook for 2022, it predicted growth of around 3%.
Inflation is expected to be 0.6% in the year 2021, up from 0.5% in September, according to the SNB's September forecast. Swiss inflation is expected to be 1% for 2022 and reach 0.6% in 2023, compared to previous forecasts for 0.7% and 0.6% rates respectively.