Switzerland's central bank retained its interest rates and raised its negative interest exemption threshold, as coronavirus is posing exceptionally large challenges to the economy.
The Swiss National Bank, on Thursday, decided to hold its policy rate and interest on sight deposits at the SNB at -0.75 percent. The bank said the Swiss franc is even more highly valued. Negative interest and interventions are necessary to reduce the attractiveness of Swiss franc investments and thus counteract the upward pressure on the currency.
The SNB will take additional steps to ensure liquidity as necessary. The central bank is providing liquidity as part of the extended swap arrangements with other major central banks, particularly in US dollars.
The central bank said it is raising the exemption threshold as of April 1, 2020, thus reducing the negative interest burden on the banking system. The threshold factor will increase to 30 from 25.
Consumer prices are forecast to drop 0.3 percent this year before rising 0.3 percent in 2021. Inflation is forecast to be 0.7 percent in 2022.
GDP growth is likely to be negative for the year as a whole.