ZURICH: The Swiss National Bank will hold firm to its expansive stance and negative 0.75% interest rate when it meets to review monetary policy on Thursday, a Reuters poll showed.
All 31 economists polled by Reuters expected Chairman Thomas Jordan to stick with the ultra-loose monetary policy the central bank has followed for the five years since scrapping its peg to the euro.
The next change was not expected for years as the SNB attempts to prevent more strengthening in the safe haven Swiss franc which could further hurt the Swiss economy, already in a recession caused by the COVID-19 outbreak.
Economists in the Sept. 16-21 poll were also unanimous the SNB would keep the interest rate on sight deposits locked down at negative 0.75% and continue currency interventions to block the franc’s rise.
“I expect the SNB to continue with its two pillar approach for the foreseeable future,” said Gero Jung, chief economist at Mirabaud.
“Since March we have seen a significant strengthening of the euro against the dollar, but the euro-Swiss franc exchange rate has not changed that much, which means it is still a concern for the SNB.”
Even as the central bank’s balance sheet expands to nearly 1 trillion Swiss francs ($1.1 trillion), many of the economists expected it to keep buying foreign currencies at the current rate of 1 to 2 billion Swiss francs per week. They said the SNB could accelerate interventions if pressure on the franc increases.
“I suppose at some point rates will have to go up, but that won’t be within my forecast horizon,” said Charlotte de Montpellier, an economist at ING.
“In the meantime, the SNB will continue to act on the foreign exchange markets and hope for better days.”
(Writing by John Revill, polling by Hari Kishan and Nagamani Lingappa; Editing by Tomasz Janowski)
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