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Swiss central bank maintains negative interest rates

The Swiss central bank kept its policy rates unchanged and said it would continue to intervene in the foreign exchange market to reduce upward pressure on the Swiss franc.

Schweizerische Nationalbank kept its interest rate on sight deposits unchanged at negative 0.75% and the target range for the three-month London interbank offered rate at negative 1.25% to negative 0.25%.

The franc has depreciated slightly on a trade-weighted basis since September but remains highly valued, according to the central bank.

Inflation is expected to come in at 0.9% for 2018 and the bank lowered its forecast for 2019 to 0.5% from 0.8%. For 2020, the central bank expects 1.0% inflation, compared with its previous projection of 1.2%.

The bank expects strong global growth in the coming quarters, but warned of significant downside risks from political uncertainties and protectionist trade policies. It said the world economy would continue to expand in the short term but a gradual slowdown is likely to follow. A sharp slowdown would quickly spread to Switzerland, the bank said.