The Swiss National Bank decided to leave the cash rate unchanged at -0.75 percent, leaving the 3-Month Libor Target Range unchanged between -1.25% to -0.25%.
On its monetary policy assessment, the Bank claimed that the Swiss Financial system has sufficient liquidity and that it will do whatever is necessary to ensure liquidity in the markets.
Besides that, the Bank stated that it will intervene in the foreign exchange market to stabilize the situation if it ends up being necessary.
“The SNB is intervening more strongly in the foreign exchange market to contribute to the stabilization of the situation,” stated the bank, “Negative interest and interventions are necessary to reduce the attractiveness of Swiss franc investments and thus counteract the upward pressure on the currency,” it added.
When referencing the coronavirus crisis, it said that the outbreak poses an exceptionally great challenge, both socially and economically, for the country. The bank expects “pronounced economic declines” in the first half of the current year and stated that the recovery speed will depend on the impact of the different healthcare, fiscal and monetary policy measures.
“In the current situation, it is extremely difficult to assess the economic outlook, and the forecasts are subject to an unusually high level of uncertainty,” it said, adding that this applies to both inflation and growth forecasts.
Right after the announcement, the Bank’s chairman, Thomas Jordan said that fiscal policy measures are central to combat the economic crisis, adding that the situation cannot be assessed with monetary policy measures alone.
“It is very important to recognize that the key measures do not come from central banks, but from medical measures and also from the fiscal side,” said Jordan, “We have to provide the financial system with enough liquidity to ensure the credit flow to the economy does not dry up…so firms can survive this very difficult situation,” he said, adding that the different global central banks are in close contact right now.
Jordan denied, once more, that the Swiss National Bank is a currency manipulator and that intervenes in the markets to take advantage of other currencies, though the bank has intervened in the foreign exchange markets since the beginning of the outbreak.
When explaining the bank’s decision to leave the interest rates unchanged, Jordan said that cutting rates wouldn’t be favorable at this moment.
By 11:29 GMT the US dollar went up by 1.28 percent against the Swiss Franc, hitting the 0.9802 level. On the other hand, the Euro went down against the Swiss Franc by 0.23 percent, falling to the 1.0541 level.