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Central bank holds interest rate steady

The Swiss National Bank (SNB) says it will maintain its expansionary monetary policy but warns that the economic recovery in Switzerland remains “fragile”.

At a news conference in Zurich, the central bank added that it was holding its key Libor interest rate – the London Interbank Offered Rate – at its present level, as expected by many financial observers.

“Risks remain significant, and for this reason we are maintaining our expansionist monetary policy,” SNB president Jean-Pierre Roth commented.

Roth added the bank would act decisively to prevent any excessive appreciation of the Swiss franc against the euro.

“An appreciation of the Swiss franc against the euro would run counter to the relaxation in monetary conditions brought about through the interest rate channel,” Roth said.

The central bank said signs of a global economic recovery were gaining strength and that the Swiss economy was also on the “road to recovery”.

However, it noted that even though economic activity had returned to growth in the third quarter, it expected gross domestic product to decline by 1.5 per cent over the year as a whole.

The SNB expects real growth of between 0.5 per cent and one per cent in 2010.

It is forecasting average inflation of -0.5 per cent in 2009, 0.5 per cent in 2010 and 0.9 per cent in 2011, but it said there were still “considerable risks” to these forecasts.


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