ZURICH (MNI) – The Swiss National Bank on Thursday left its target
range for the three-month Swiss franc Libor unchanged at 0.0%-0.75% and
said it would continue targeting the lower end of the range at
approximately 0.25%.
The central bank confirmed its outlook for economic growth this
year at around 2% and edged up its projection for average inflation to
0.9% from 0.8% expected in March.
Inflation next year is seen averaging 1.0%, down from 1.1% expected
in March. For 2013, inflation is seen at 1.7%, down from 2.0%
previously.
The decision to keep interest rates on hold had been widely
expected, given the ongoing rise in the Swiss franc and still benign
domestic inflation.
The franc hit a fresh record high against the euro this week after
EU finance ministers were unable to agree on how to keep the Greek
government financially afloat.
Along with the downward revision for inflation in coming years,
this gives the SNB leeway to assess the EMU debt crisis before beginning
to apply brakes to the economy. Some analysts expect a first tightening
move in the second half of this year, although the markets appear less
convinced.
Domestic consumer prices were flat in May, which lifted the annual
inflation by 0.1 point to 0.4%. Core inflation has retreated from 0.8%
in March to a flat annual reading.
GDP growth slowed to 0.3% in 1Q from 0.8% in 4Q, as domestic demand
stagnated while rising inventories offset most of the big boost from
foreign trade. At the same time, exports remain dynamic despite the
appreciation of the franc and declining unemployment augurs a pick-up in
private consumption.
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