AFP, Zurich :
The Swiss National Bank said Thursday would intervene more strongly on the foreign exchange market to stabilise the Swiss franc as it forecast negative growth for 2020 due to the coronavirus pandemic.
The SNB said it was keeping its key interest rate of minus 0.75 per cent unchanged, following its quarterly monetary policy meeting.
The central bank said the coronavirus outbreak posed “exceptionally large” social and economic challenges for Switzerland and that the outlook for the wealthy Alpine country and the global economy had “worsened markedly”.
It said its expansionary monetary policy was “more necessary than ever” for ensuring appropriate monetary conditions in Switzerland.
The bank is “keeping the SNB policy rate and interest on sight deposits at the SNB at minus 0.75 per cent”, it said.
“The SNB is intervening more strongly in the foreign exchange market to contribute to the stabilisation of the situation.
“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.
In December, the SNB had still expected growth of between 1.5 per cent and two percent for 2020.
But the central bank said the downturn in the international economy and measures to contain the spread of the virus would lead to a “marked decline” in economic activity in Switzerland in the first half of the year.
It said that once national and international containment measures could be lifted, economic activity was likely to return to normal, albeit gradually.
“Even under this assumption, however, GDP growth is likely to be negative for the year as a whole,” the bank said, adding that forecasts were very uncertain in these circumstances.
“The return to normality from the second half of the year onwards could thereafter be reflected in strong positive growth in 2021.” The central bank said the Swiss financial system had sufficient liquidity, but the SNB would take “additional steps” to ensure liquidity as necessary.
