Central bank “vigilant” amid cooling economy
The Swiss National Bank (SNB) will keep its key interest rate unchanged at 2.75 per cent despite inflation rising to a 15-year high of 2.9 per cent in May.
The central bank said on Thursday that the inflationary trend was “temporary” and that inflation will fall below the two per cent level in 2009.
It was the third time in nine months that the SNB has held steady the band in which interest rates move, at 2.25 per cent to 3.25 per cent, as it weighs up the risks of rising inflation against slowing economic growth.
“There is enough reason to suggest that the current inflationary trend is of a transitory nature,” SNB President Jean-Pierre Roth told journalists in Geneva.
But he admitted that there were “significant risks” attached to this favourable forecast and the bank would remain “very vigilant”.
Switzerland’s central bank said it would work to strengthen the country’s financial system, including forcing banks to put more money aside to cover risks.
Roth also expressed continued concern over the effect of the United States real estate crisis on financial markets.
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