Swiss central bank keeps rates unchanged, as expected

The Swiss National Bank kept its main policy rate unchanged at -0.75% on Thursday, as analysts had expected.

In his introductory remarks at today's press conference, SNB president Thomas Jordan said the central bank had slightly lowered its forecasts for consumer prices in 2015 and 2017.

Both were lowered by one tenth of a percentage point to -1.1% and -0.5%, respectively.

Nevertheless, "companies evidently believe that the negative inflation that we are currently experiencing will be temporary," Jordan added.

Likewise, the central bank's assessment of the outlook for the global economy was "cautiously optimistic" despite which the SNB continued to see "significant risks".

"Our overall assessment of global economic prospects is cautiously optimistic. We nevertheless see significant risks. The structural change underway in China could continue to hold back global manufacturing and investment activity. Equally, structural weaknesses in Europe have yet to be addressed. Current concerns about public safety could also weigh on economic developments."

The European Central Bank governing council’s decision on 3 December to provide less stimulus than many market observers had anticipated – which boosted the value of the single currency – may have relieved the pressure on the SNB to act today by pushing rates further into negative territory, Spreadco analyst David Morrison said.

However, the Swiss franc continued to be "significantly" overvalued, the SNB said.

For that reason, the monetary authority continues to be "active" in foreign exchange markets "as necessary".

As of 09:16 the US dollar was strengthening 0.47% to 0.9878 versus the Swiss franc.