The Swiss National Bank stuck to its policy of negative interest at the quarterly review. The monetary policy board emphasized the high level of uncertainties due to the pandemic and trade policy tensions.

The Swiss National Bank has kept its key interest rate at minus 0.75 percent, according to a statement by the bank on Thursday. The policy aims to prevent the franc from appreciating against other currency and to cushion the impact that the pandemic has on the economy.

Rising Rates of Infection Remain a Risk

The bank also said that the outlook for the global economy was subject to a high degree of uncertainty. Rising rates of infections may prompt renewed measures to contain the pandemic, which would weigh heavily on the economy. Furthermore, the trade tensions remain a constant threat to economic growth.

In its baseline scenario for the global economy, the banks anticipates that the governments will manage to contain the virus without a renewed serious impairment of economic activity. It would allow the economies to continue their path to recovery. In Switzerland, the economy has recovered significantly since May. This should be reflected in a strong rise of GDP in the third quarter, the bank said.

Incomplete Recovery

The positive development is likely to continue into 2021. GDP will shrink about 5 percent in 2020, somewhat less than the SNB anticipated in June. And still the most since the crisis of the mid-1970s.

The recovery will however remain incomplete both in Switzerland and abroad and production capacities will stay underutilized for an extended period of time and unemployment is likely to increase further.