The Swiss National Bank left its expansionary monetary policy unchanged on Thursday.
Policymakers of the central bank decided to retain the policy rate and interest on sight deposits at the SNB at -0.75 percent.
The bank repeated that it is willing to intervene in the foreign exchange market as necessary, in order to counter upward pressure on the Swiss franc. The Swiss franc remains highly valued, the bank said.
Russia’s invasion of Ukraine has led to a strong increase in uncertainty worldwide. Against this backdrop, the SNB with its monetary policy is ensuring price stability and supporting the Swiss economy, the bank added.
The bank upgraded its inflation outlook for this year due to the significant increase in prices for oil products. Inflation is forecast to rise to 2.1 percent this year instead of 1.0 percent projected in December. For 2023 and 2024, inflation is seen at 0.9 percent.
The SNB noted that the war in Ukraine has had an effect on the Swiss economy above all via the strong increase in commodity prices. The central bank anticipated GDP growth of around 2.5 percent, this being lower than its previous forecast.
It is difficult to assess the future course of the war and its economic impact. The risks to growth are considerable and to the downside, said SNB.