SNB Keeps Deposit Rate at Record Low as Franc Weighs on Economy

The Swiss National Bank kept its deposit rate at a record low as the strong franc weighs on the economy and pushes down prices.

The SNB maintained its rate on sight deposits at minus 0.75 percent on Thursday, as forecast by 22 of 25 economists in a Bloomberg survey. The central bank also said the franc remains overvalued and said it sees consumer prices plunging 1.1 percent this year. President Thomas Jordan and his fellow governing- board members will hold a press conference at 10 a.m. in Zurich.

The Swiss economy was dealt a shock on Jan. 15 when the central bank announced it would give up its ceiling on the franc of 1.20 per euro and instead increased its charge on sight deposits. The move sent the franc spiraling while the stock market tumbled, triggering losses at financial firms and raising the specter of an economic downturn.

“The SNB will continue to take account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy,” the central bank said. “It will therefore remain active in the foreign exchange market, as necessary.”

Since early February, the franc has traded weaker than 1.04 per euro, even as the European Central Bank embarked on quantitative easing. Still, the franc remains “massively” overvalued, SNB Alternate Governing Board Member Thomas Moser said last month.

Policy makers also kept the range for three-month Libor at between minus 1.25 percent and minus 0.25 percent.