Swiss central bank holds rate

11th December 2009, Comments 0 comments

The Swiss National Bank on Thursday forecast 1.0 percent economic growth for 2010.

Zurich -- The Swiss central bank on Thursday held its key interest rate at a range of zero to 0.75 percent, and forecast that the economy would expand by up to 1.0 percent in 2010.

"Signs of a global economic recovery are gaining strength. The Swiss economy is also on the road to recovery and is developing as expected," said the Swiss National Bank in a statement.

Gross domestic product is now expected to contract by just 1.5 percent for the full year, at the better end of the 1.5 and 2.0 percent contraction that it predicted in September.

For 2010, the economy is expected to expand by between 0.5 and 1.0 percent.

However, the central bank cautioned that the economic recovery remains "fragile".

Coupled with deflation of -0.5 percent expected for 2009, the SNB said it has therefore decided to hold its key lending rate.

"The financial industry is gradually recovering, but another deterioration cannot be entirely ruled out. A risk of deflation remains. For these reasons, it would not be appropriate to raise interest rates at the moment," it said.

It forecast a slight inflation of 0.5 percent for 2010, and 0.9 percent for 2011.

The SNB also said it would provide the economy with a "generous supply of liquidity" and reiterated that it would "act decisively" to prevent the Swiss franc from appreciating against the euro.

AFP / Expatica

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