SNB Says Expansionary Policy Necessary As It Sees Worst Swiss Economic Contraction Since 1970s
18 Junio 2020 - 4:43AM
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Switzerland's central bank kept its expansionary monetary policy
stance as it expects the economy to contract the most in over five
decades and inflation to remain more negative than forecast
earlier, this year due to the impact of the coronavirus, or
Covid-19, and the lockdown restrictions imposed to slow the
pandemic. The Swiss National Bank left the key interest rate
unchanged at -0.75 percent, in line with economists' expectations,
and said it remains willing to intervene more strongly in the
foreign exchange market due to the high valuation for the Swiss
franc. "The SNB's expansionary monetary policy remains necessary to
ensure appropriate monetary conditions in Switzerland," the central
bank said in a statement. The central bank has provided banks with
around CHF 10 billion in liquidity at the policy rate since the
launch of the Covid-19 refinancing facility.
SNB Governing Board Chairman Thomas Jordan said the bank's
expansionary policy has proved its worth and remains necessary. He
hoped that the worst phase of the Covid-19 pandemic is over, but
said a difficult phase of recovery lies ahead. Governor Jordan also
said that the SNB has made substantial interventions in the forex
market since its March policy session and these have helped to ease
the upward pressure on the Swiss franc somewhat. "We believe that
it will try to wait until the crisis passes and the uncertainty
dissipates with a broadly unchanged monetary policy," ING economist
Charlotte de Montepellier said. "For the time being, however, the
SNB believes that the current situation is manageable and will
therefore continue to rely on its usual instruments," the economist
added.
The bank cut its inflation forecast for this year to -0.7
percent from -0.3 percent seen in March, citing weaker growth
prospects and lower oil prices. The central bank said the economy
is set to shrink around 6 percent this year, which would be worst
decline since the oil crisis of 1970s. The SNB hopes that any
second wave of the coronavirus pandemic will be successfully
prevented globally. The Swiss economy is in a sharp recession and
the slump in economic output will be even more severe in the second
quarter, the SNB said. The recent signals suggest that the economic
activity again picked up somewhat since May, the bank said.
However, the bank sees only a partial recovery for now and said the
GDP will not return quickly to its pre-crisis level. The economic
revival seen for the second half of this year is likely to be
reflected in clearly positive growth in 2021, the bank said. Fritz
Zurbrugg, vice-chairman of the Governing Board, said the two
globally-focussed Swiss banks - Credit Suisse and UBS, are well
placed to deal with the challenges posed by the economic crisis
triggered by the coronavirus pandemic. He also said that the
domestically-focussed Swiss banks' resilience is adequate overall.
Andrea Maechler, a Governing Board member, said the financial
market situation and the currency market situation have improved
since March, but the uncertainty remains high.
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