trending Market Intelligence /marketintelligence/en/news-insights/trending/ZaUCeC58sGRcjbtGlu8Y2g2 content esgSubNav
In This List

Swiss central bank lowers GDP growth outlook, holds rate

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Swiss central bank lowers GDP growth outlook, holds rate

The central bank of Switzerland maintained its key negative rates and increased the threshold for bank deposits exempt from negative rates while cutting its growth outlook amid the ongoing global economic slowdown.

The Swiss National Bank left the policy rate and the rate on sight deposits unchanged at negative 0.75%. The central bank ditched the three-month Swiss franc Libor and switched to the Swiss Average Rate Overnight in June.

The threshold for sight deposits exempt from negative rates will be raised and updated monthly. Interest will continue to be charged on deposits exceeding the exemption threshold. The adjustment to the calculation of negative interest on sight deposits takes effect Nov. 1.

The central bank lowered its inflation forecast for 2019 to 0.4% from 0.6% estimated previously, and to 0.2% from 0.7% for 2020. For 2021, it expects inflation growth of 0.6%, down from a prior forecast of 1.1%.

It also cut the GDP growth outlook for the year to a range of between 0.5% and 1%, compared to 1.5% projected in June, largely due to downward revisions to growth rates for the second half of 2018 and the first quarter of 2019.

The central bank said that political uncertainty and trade tensions pose downside risks to the global economy. A number of Middle Eastern and Asian central banks eased their monetary policies in wake of the U.S. Federal Reserve's widely expected rate cut announced Sept. 18.

The Swiss franc was trading 0.5% higher against the dollar around 4:44 a.m. ET.

"[The central bank] remains willing to intervene in the foreign exchange market as necessary," the Swiss National Bank said. "The situation on the foreign exchange market is still fragile, and the Swiss franc has appreciated in trade-weighted terms."