Monetary policy assessment of 13 June 2019
Central bank: snb | Type: statement | Date: 2019-06-13

Monetary policy assessment of 13 June 2019
unchanged and introduces SNB policy rate
price developments and supporting economic activity. Interest on sight deposits at the SNB is
unchanged at –0.75%. The SNB will remain active in the foreign exchange market as
necessary, while taking the overall currency situation into consideration.
this rate in taking and communicating its monetary policy decisions. The SNB policy rate
replaces the target range for the three-month Libor used previously, and currently stands at
−0.75%. The SNB’s monetary policy thus remains as expansionary as before. Interest on sight
deposits held by banks at the SNB currently corresponds to the SNB policy rate and remains
at −0.75%. The SNB will seek to keep the secured short-term Swiss franc money market rates
close to the SNB policy rate. SARON is the most representative short-term money market rate
today, and is also establishing itself as the reference rate for financial products.
The reason for introducing the SNB policy rate is that the future of the Libor is not
guaranteed. The UK’s Financial Conduct Authority will only ensure that the Libor is
maintained through to the end of 2021. The SNB’s conditional inflation forecast is based on
the assumption that a given interest rate remains unchanged over the entire forecast horizon of
three years. The three-month Libor has been used for this purpose to date. Given that the
current forecast for the first time extends beyond the end of 2021, the introduction of the SNB
policy rate ensures that it will be based on the same interest rate over the entire horizon.
The SNB’s expansionary monetary policy remains necessary against the backdrop of the
current price and economic developments. On a trade-weighted basis, the Swiss franc is
1 For detailed information, please see Thomas Jordan’s introductory remarks to the news conference on 13 June 2019 at 10.00 am CET.
Berne, 13 June 2019
Press release
somewhat stronger than in March and is still highly valued. The situation on the foreign
exchange market continues to be fragile. The negative interest rate and the SNB’s willingness
to intervene in the foreign exchange market as necessary remain essential in order to keep the
attractiveness of Swiss franc investments low and thus ease pressure on the currency.
The new conditional inflation forecast for the coming quarters is slightly higher than in
March. This is primarily attributable to a rise in the prices of imported goods. The longer-term
inflation forecast is virtually unchanged. For 2019 it stands at 0.6%, up from the figure of
0.3% last quarter. For 2020, the SNB anticipates an inflation rate of 0.7%, compared to 0.6%
last quarter. The forecast for 2021 is 1.1%, 0.1 of a percentage point lower than last quarter.
The conditional inflation forecast is based on the assumption that the SNB policy rate remains
at –0.75% over the entire forecast horizon.
The signs from the global economy remain mixed. GDP growth picked up in the first quarter,
with all large economies recording above-average expansion. However, manufacturing output
again tended to weaken in a number of countries. In its baseline scenario for the global
economy, the SNB expects growth in the coming quarters to remain in line with potential. In
the advanced economies, expansionary monetary policy is lending support, as is fiscal policy
in some countries. Inflationary pressure is likely to remain moderate. The risks to this baseline
scenario are still to the downside. However, they are more pronounced than at our previous
monetary policy assessment. Chief among them are political uncertainty and trade tensions,
which could lead to renewed turbulence on the financial markets and a further dampening of
economic sentiment.
The Swiss economy also gathered momentum at the beginning of the year. According to the
initial estimate, GDP grew by 2.3% in the first quarter. Labour market developments were
also positive. Production capacity in Switzerland was well utilised overall. The economic
indicators point towards momentum remaining favourable. Against this backdrop, the SNB
continues to expect the economy to grow by around 1.5% in 2019. As is the case with the
global economy, the risks for this scenario remain to the downside. In particular, an
unexpectedly sharp slowdown internationally would quickly spread to Switzerland.
Imbalances persist on the mortgage and real estate markets. Both mortgage lending and prices
for single-family homes and privately owned apartments continued to rise slightly in recent
quarters, while prices in the residential investment property segment declined somewhat.
Nevertheless, due to the strong price increases in recent years and growing vacancy rates there
is the risk of a correction in this segment in particular. The SNB will continue to monitor
developments on the mortgage and real estate markets closely, and will regularly reassess the
need for an adjustment of the countercyclical capital buffer.
Berne, 13 June 2019
Press release