Swiss National Bank keeps expansive policy in place despite inflationary pressures

The Swiss National Bank is keeping its ultra-loose monetary policy in place, the central bank said on Thursday, while raising its inflation forecasts as the global economy recovers from last year's pandemic.

The SNB kept its policy rate locked at -0.75 per cent, as unanimously forecast by economists in a Reuters poll.

The central bank also kept the interest rate it charges commercial banks on some deposits they park overnight at -0.75 per cent, as expected.

The SNB said the franc remained highly valued. The currency has regained strength in recent weeks as other central banks kept their interest rates low.

The SNB also followed the European Central Bank and the US Federal Reserve in raising its inflation forecasts.

The Swiss central bank, which targets inflation in a range of 0 per cent to 2 per cent, now expects inflation of 0.4 per cent in 2021, compared to its March forecast of 0.2 per cent.

Higher inflation is now expected in the next two years, with rates of 0.6 per cent in both 2022 and 2023, up from its previous expectation of prices rising by 0.4 per cent and 0.5 per cent, respectively.