The Swiss central bank is sticking to its guns and maintaining the negative rate policy. The governors of the bank lowered their inflation forecast. Also, they expect the real estate market to be in for a correction in the medium term.
The Swiss National Bank (SNB) today had no surprise in store for the markets: the governors of the bank left the target rate band for the 3-month Libor at -1.25 to -0.25 percent, the bank said in a statement on Thursday.
The bank will maintain the policy aimed at weakening Switzerland’s currency and at the prevention of deflation. The SNB will continue to make interventions on the currency markets when necessary.
Inflation Forecast Down
The bank lowered its inflation forecast for 2018 to 0.6 percent from a previous 0.7 percent. For 2019, the SNB expects a rate of 0.9 percent, down from a previous forecast of 1.1 percent.
The Swiss franc by contrast has edged higher again recently and thus the question remains how effective negative rates in reality have been.
Brisk Construction Business
Construction has been brisk in Switzerland, not least because of the negative rates, which made mortgages cheaper for home owners. The prices for real estate have again increased, according to the bank.
«Owing to the strong growth in recent years, this segment in particular is subject to the risk of a price correction over the medium term,» the SNB said in the statement.
