ZURICH Dec 13 The Swiss National Bank made the
following statement after its policy review on Thursday:
The Swiss National Bank (SNB) is leaving the minimum
exchange rate of CHF 1.20 per euro unchanged. The Swiss franc is
still high. An appreciation of the Swiss franc would compromise
price stability and would have serious consequences for the
Swiss economy. Consequently, the SNB will continue to enforce
the minimum exchange rate with the utmost determination. It is
prepared to buy foreign currency in unlimited quantities for
this purpose. In addition, the SNB is leaving the target range
for the three-month Libor at 0.0-0.25%. If necessary, it stands
ready to take further measures at any time.
Essentially, the SNB's conditional inflation forecast is
unchanged from its September forecast. In the short term, price
movements will again be subdued by a somewhat weaker economy in
the euro area. In addition, the impact which past appreciation
of the Swiss franc is having on the price level is rather
stronger than had originally been expected. From mid-2013
onwards, the path of the new conditional inflation forecast is
almost identical to that of September. The forecast is based on
an unchanged three-month Libor of 0.0% over the next three
years. Given this assumption, the Swiss franc weakens over
the forecast period. Nevertheless, forecast inflation remains
low for the next few years. For 2012, the inflation rate will
amount to -0.7%. For 2013, the National Bank expects inflation
of -0.1% and for 2014, 0.4%. In the foreseeable future,
therefore, there is no risk of inflation in Switzerland.
The third quarter of 2012 saw weak growth and a decline in
trading activity worldwide. Although growth in the US economy
and some of the emerging economies picked up, a mild recession
persisted in the euro area. In Switzerland, real GDP in the
third quarter increased again following a temporary downturn.
For the fourth quarter, however, the Swiss National Bank
expects significant weakening in growth. Consequently, economic
growth in Switzerland for the year 2012 is likely to remain
unchanged at around 1.0 percent. For 2013, the SNB expects
growth of 1.0-1.5 percent.
The downside risks for the Swiss economy remain
considerable. Although the measures announced by the European
Central Bank have significantly reduced the probability of
extreme developments in the monetary union, there is still
substantial uncertainty in connection with the management of the
debt crisis in the euro area. It also remains to be seen how far
the upcoming budget consolidation in the US will hamper growth.
This question is weighing on the sentiment in the financial
markets and the real economy. Moreover, momentum in the Swiss
residential mortgage and real estate markets remains strong, and
has led to a further increase in risks for financial stability.