The Swiss National Bank Policy Committee statement:
The Swiss National Bank (SNB) is leaving the minimum exchange rate unchanged at CHF 1.20 per euro, and will continue to enforce it with the utmost determination. It remains committed to buying foreign currency in unlimited quantities for this purpose. The Swiss franc is still high and is weighing on the Swiss economy. For this reason, the SNB will not permit an appreciation of the Swiss franc, given the serious impact this would have on both prices and economic performance in Switzerland. It is leaving the target range for the three-month Libor rate unchanged at 0.0–0.25%. If necessary, it stands ready to take further measures at any time.
Compared to the June forecast, the SNB’s conditional inflation forecast has been adjusted downwards slightly. It is based on a three-month Libor of 0%. The further deterioration in the inflation outlook stems partly from the unfavourable prospects for the global economy and a more pronounced underutilisation of production capacity in Switzerland, and partly from the fact that a depreciation of the Swiss franc has failed to materialise as expected. The forecast continues to project that the Swiss franc will weaken over the forecast horizon. The SNB is expecting an inflation rate of –0.6% for 2012, 0.2% for 2013, and 0.4% for 2014. Consequently, there is no threat of inflation in Switzerland in the foreseeable future.
In the second quarter of 2012, economic growth weakened worldwide. Although the emerging economies continued to underpin the global expansion, their rates of growth were lower than expected. Economic performance in the US remained lacklustre. In the euro area, recessionary trends were accentuated and a number of peripheral economies registered strongly negative growth rates. The unfavourable international environment also weighed on the Swiss economy. In the second quarter, real GDP fell slightly and unemployment increased. As a result of the deterioration in the global economic outlook and the downward revision of GDP for earlier quarters, the SNB is now expecting growth of around 1% for Switzerland in 2012, as opposed to the 1.5% projected in the June forecast.