Swiss National Bank turns less gloomy, keeps policy on hold

Credit: REUTERS/ARND WIEGMANN

The Swiss National Bank turned less gloomy on the coronavirus pandemic's impact on the Swiss economy while keeping its ultra-expansive monetary policy on Thursday.

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ZURICH, Sept 24 (Reuters) - The Swiss National Bank turned less gloomy on the coronavirus pandemic's impact on the Swiss economy while keeping its ultra-expansive monetary policy on Thursday.

It stuck to its twin-track approach of negative interest rates and interventions in the foreign currency markets to curb the strength of the safe-haven Swiss franc.

The SNB kept its policy interest rate at minus 0.75% and the negative interest rate it charges on sight deposits at the same level, as unanimously expected by economists in a Reuters poll.

The SNB said it was maintaining its expansionary monetary policy to cushion the "strong influence" of the coronavirus pandemic on economic developments, although its impact was not as severe as previously feared.

It now expected Swiss inflation to turn positive next year, with a rate of 0.1% in 2021, rising to 0.2% in 2022.

The central bank upgraded its economic forecast for Switzerland, saying it now expected GDP to shrink by 5% this year, better than the 6% contraction it forecast in June.

The SNB said it revised its forecast after the first half downturn in Switzerland proved less strong than initially feared. It also said it expected the global economy to have a robust recovery in the third quarter.

The SNB said it saw the Swiss franc as still "highly valued' and was ready to intervene more strongly in the foreign exchange markets to tackle the issue.

(Reporting by John Revill; Editing by Michael Shields)

((John.Revill@thomsonreuters.com; +41 58306 7022; Reuters Messaging: john.revill.thomsonreuters.com@reuters.net))

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