SNB kept sign deposit rate unchanged at -0.75% today. It noted that coronavirus is posing “exceptionally large challengers” for Switzerland, and the expansionary monetary policy is “more necessary than ever” for ensuring appropriate monetary conditions. The central bank is “intervening more strong” in the FX markets to stabilize the situation. Both negative interest and interventions are “necessary to reduce the attractiveness of Swiss franc investments”.

Additionally, SNB is raising the exemption threshold as of April 2020 to reduce the negative interest burden on the banking system. The threshold factors will increase from 25 to 30. It’s also examining whether a “relaxation of countercyclical buffer” would be possible.

New conditional inflation forecast is lowered primarily due to “lower oil prices, significantly weaker growth prospects and stronger Swiss franc”. Inflation is expected to be in slightly negative territory at -0.3% this year, turned slightly positive to 0.3% in 2021, then rise to 0.7% in 2022. Growth is “likely to be negative” for 2020 as a whole.

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