The Swiss central bank said it would keep its policy rates unchanged in negative territory and continue to intervene in the foreign exchange market as it seeks to limit the value of the franc, which it said remained overvalued against the U.S. dollar.
The monetary policy committee of the Schweizerische Nationalbank said that it maintained its interest rate on sight deposits at negative 0.75% and the target range for the three-month London Interbank Offered Rate at between negative 1.25% and negative 0.25%.
"Since the last monetary policy assessment, the Swiss franc has weakened further against the euro and, more recently, has also depreciated against the U.S. dollar. The overvaluation has thus continued to decrease, yet the franc remains highly valued," the bank said.
"Therefore, despite the easing of the situation, the negative interest rate and the SNB's willingness to intervene in the foreign exchange market as necessary remain essential."
Higher oil prices and depreciation of the franc led the central bank to raise its inflation forecast for 2017 to 0.5%, from an estimate of 0.4% in the previous quarter. The central bank anticipates an inflation rate of 0.7% in 2018, up from 0.4% last quarter. Inflation is expected to hit 1.1% in 2019.
Third-quarter economic growth stood at an annualized rate of 2.5%. The central bank projects economic recovery to continue in the coming months, with 2018 growth anticipated at 2% compared to 1% in 2017.
