GENEVA, SWITZERLAND – The Swiss National Bank vowed Thursday 15 March to maintain the franc’s exchange rate against the euro, saying that the appreciation of the national currency could have serious repercussions on the country’s economy.
The Zurich-based monetary institution says it will continue to defend the franc in the existing “currency war”, by maintaining the franc at 1.2 euros, through the unlimited purchase of euros.
Last week, Thomas Jordan, president of the SNB, announced that the bank had spent CHF 188 billion in defending the exchange rate, which was set in November 2011 when the franc came close to parity with the euro, threatening the growth of the economy.
In the quarterly report, the SNB says it expects the economy to grow by one to one-and-a-half percent, the same as in the December 2012 forecast. Prices are expected to fall 0.2 percent this year, and rise by the same amount in 2014, although in December’s forecast prices were expected to fall by 0.1 percent in 2013 and increase 0.4 percent next year. In February, prices had continued to decrease for a 17th month, due largely to cheaper imported goods.
The bank also said Thursday that it would maintain the band for the benchmark interest rate, or Libor, unchanged at zero percent to 0.25 percent.