SNB is stuck with current policy
The Swiss National Bank’s Vice President Jean-Pierre Danthine said that the central bank’s ceiling on the franc will stay in place as long as it is needed – not forever, but as long as it “corresponds to monetary conditions”.
The SNB doesn’t let EUR/CHF to fall below 1.20 since Sept. 2011. Danthine underlines that “inflation is basically zero”. Swiss consumer prices ended 21 months of declines in July: CPI was flat y/y, though 0.4% lower m/m. Although the ceiling was introduced to limit CHF appreciation, it does little to help the nation in escaping deflation. Analysts don’t expect the SNB to raise its benchmark interest rate from levels close to 0 this year or next.