Charlotte de Montpellier, economist at ING, points out that the Swiss central bank decided today to keep its monetary policy unchanged and leave the main policy rate at -0.75%.

Key Quotes

“The monetary policy assessment was not fundamentally different from that of March. In its text, the central bank was not really more "dovish" than the last meeting, unlike other big central banks like the Federal Reserve and the European Central bank. It still considers that the Swiss franc is "highly valued" and has not really changed its analysis of the macroeconomic situation.”

“The Swiss central bank considers that downside risks are greater than at the March meeting but it did not change its forecast for GDP growth. It has slightly changed its inflation forecast for 2020 (upwards) and for 2021 (downward), but not enough to signal a change of course.”

“The only change in monetary policy is more a technical change: the SNB has changed the reference rate for its monetary policy. If it was basing itself on the 3-month Libor, it stopped that because the future of the 3-month Libor is not guaranteed after 2021. So it set a new benchmark rate, called "the SNB policy rate". The SNB is still aiming to keep short-term interest rates on the money market pledged in francs at a level close to that of its key rate.”

“Given today's decision, we think the SNB will keep rates at their current level for a long time. We will probably have to wait for the next economic cycle to see the Swiss central bank raise rates, which means not before 2023.”