Swiss National Bank Holds Key Interest Rate

(RTTNews) - Thursday, the Swiss National Bank left its key interest rate unchanged for a fourth time to support the economy, which is emerging from the shadows of the worst recession.

In its first quarterly meeting of this year, the central bank's Governing Board, led by Chairman Jean-Pierre Roth, left its three-month libor target range unchanged at 0%-0.75%, as expected. In effect, the bank kept its key interest rate unchanged at 0.25%.

Sticking to its stance on the country's currency, the SNB said it will act decisively to prevent an excessive appreciation of the Swiss franc against the euro.

The central bank revised up its real GDP growth forecast for 2010 to 1.5% from growth of between 0.5% and 1% predicted in December. However, the central bank said the economic revival remains fragile and is associated with uncertainties.

The SNB sees inflation at 0.7% in 2010 and at 0.9% in 2011. Forecast for 2010 was revised from 0.5% predicted in December, while 2011 outlook remained unchanged.

The bank noted that short-term price stability is not threatened. But, the current expansionary monetary policy cannot be maintained throughout the entire forecast horizon without compromising medium and long-term price stability. It warned that the danger of deflation cannot be entirely ruled out if more external shocks occur.