By Dow Jones Business News, March 14, 2013, 05:15:00 AM EDT
ZURICH--The Swiss National Bank Thursday reiterated it would intervene in currency markets to prevent the Swiss franc
from strengthening above 1.20 against the euro, and warned the Alpine country would face sluggish economic growth going
The central bank also maintained its target range for the three-month Swiss franc London interbank offered rate at 0%
to 0.25% for a seventh consecutive quarter. The decision was widely expected by economists.
The SNB said it was prepared to buy foreign currency in unlimited quantities to maintain the floor, which was
introduced in September 2011 after the franc neared parity with the euro as investors seeking a safe haven from the euro
crisis pushed up the value of the franc.
It also did not rule out "further measures' to maintain the rate, which was launched to prevent deflation and protect
"An appreciation of the Swiss franc would compromise price stability and would have serious consequences for the Swiss
economy," the SNB said.
The minimum exchange rate is an important instrument in avoiding an undesirable tightening of monetary conditions, the
"The SNB will therefore enforce this minimum rate with the utmost determination and, if necessary, is prepared to buy
foreign currency in unlimited quantities for this purpose," it added.
The central bank said it expects the Swiss economy to expand 1% to 1.5% this year. In 2012 GDP rose 1%, according to
This means Switzerland is likely to outpace the rest of Europe as the region is only slowly starting to emerge from
the deepest financial and economic crisis in decades.
The European Union, of which Switzerland isn't a member, is expected to expand at a 0.1% pace this year, while the 17-
country euro zone may contract 0.3%, according to the latest projections from the EU Commission.
The SNB expects a negative inflation rate this year of -0.2%. In 2014, inflation should come in at 0.2% and stand at
0.7% in 2015, it said.
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